Yahoo Finance FTSE 100 Live 23 January: London top flight closes down two points after borrowing comes in below expectations
The seasonal performances of Primark and Mr Kipling are in today’s spotlight after Associated British Foods and Premier Foods published updates.
Crest Nicholson’s annual results, a debt crisis at Southend airport and the latest UK public borrowing figures are among today’s other developments.
Meanwhile, stock markets are on the front foot after Wall Street set new records last night and Asia shares benefited from speculation of China stimulus measures.
Key points
December public sector borrowing lowest since 2019
Primark on the up thanks to Rita Ora
Debt crisis at Southend airport
FTSE 100 closes down 1.9 points
Tuesday 23 January 2024 16:37 , Daniel O'Boyle
The FTSE 100 has closed at 7,485.73 today, slightly down for the day.
London's top flight started strong, hitting 7516, but faded fast and remained close to where it opened for most of the day.
Standard Chartered and Endeavour Mining were among the big risers amid reports of Chinese economic stimulus.
Admiral And Rolls-Royce led the fallers.
City Voices: It's a question of time before the UK gets its own Bitcoin ETFs
Tuesday 23 January 2024 16:24 , Daniel O'Boyle
Just as London played host to successful fintech pioneers such as Starling and Monzo, so equivalent success for digital assets firms can now happen, Eva Gustavsson writes
All too often, as Shakespeare wrote, sound and fury signifies nothing. But the frenzied reaction to the US Securities & Exchange Commission’s (SEC) approval of the sale of spot Bitcoin exchange-traded funds (ETFs) last week matched the significance of the occasion.
After a decade-long wait, US investors are now able to gain exposure to the digital currency Bitcoin through ETFs (investment funds that track the performance of underlying assets) without having to directly buy it on a cryptocurrency exchange. That the 11 firms granted SEC approval to offer 11 Bitcoin ETFs included US asset management heavyweights BlackRock, Fidelity Investments and Franklin Templeton demonstrated how the gap between traditional and digital asset markets will be significantly diminished by this development.
Standard Chartered Bank estimates the issuance of Bitcoin ETFs will attract inflows of $50-$100 billion in 2024 and there’s been no shortage of debate over the effect of the news on the price of Bitcoin. Yet the transformative impact of US regulatory authorisation of spot Bitcoin ETFs transcends short-term financial gains.
City Comment: Tax cuts are tempting, but Hunt must act for the long term
Tuesday 23 January 2024 15:32 , Jonathan Prynn
There have not been too many occasions in recent years when the ONS number crunchers have delivered economic data markedly better than City forecasts.
So let’s allow Jeremy Hunt to enjoy the moment today. The £7.8 billion borrowed by the government in December was the lowest for the month since 2019, admittedly a pretty low bar to set given what has come since then. But it was well below the £11.4 billion pencilled in by City scribblers.
More importantly borrowing is now on course to undershoot the OBR’s projections by £5 billion in the current financial year, and much more next year. In the time honoured phrase, that gives the Chancellor “wiggle room” to deliver crowd pleasing tax cuts of up to £20 billion when he rises to his feet in the Commons on March 6, according to the commentators.
But let us not get too carried away.
US market snapshot
Tuesday 23 January 2024 15:09 , Daniel O'Boyle
Take a look at the latest US market snapshot with the S&P 500 still hovering around record highs
Wall Street stocks to climb slightly further
Tuesday 23 January 2024 13:59 , Daniel O'Boyle
US stocks are set to climb even higher, according to futures markets.
S&P 500 futures are up 0.2% to 4,890.00, which would be another record high. Nasdaq futures are up 0.3% to 17,510.00, the highest since 2021. Dow Jones futures are down slightly, at 38,173.00.
Big premarket risers include Alibaba's US stocks amid reports of major stimulus in China, and telecoms giant Verizon.
Early afternoon market snapshot
Tuesday 23 January 2024 13:40 , Daniel O'Boyle
Take a look at today's market snapshot, with the FTSE 100 close to flat.
Santander becomes first 'big six' lender to raise mortgage rates this year
Tuesday 23 January 2024 12:29 , Daniel O'Boyle
Santander has become the first “big six” lender to raise mortgage interest rates this year, following last week’s shock rise in inflation.
However, brokers said the change was unlikely to be the first step in a wave of big price increases.
Lenders started the year with a wave of price cuts, in the hope that the Bank of England would soon cut its own base rate.
FTSE 100 falls into red
Tuesday 23 January 2024 11:31 , Daniel O'Boyle
The FTSE 100 is in negative territory, despite starting the day ahead.
Take a look at our latest market snapshot.
Ryanair agrees first deal with online travel agent
Tuesday 23 January 2024 11:23 , Daniel O'Boyle
Ryanair has launched its first partnership with an online travel agent (OTA) despite repeatedly branding the companies “pirates”.
The Dublin-based airline said it has agreed a deal with loveholidays to offer its flights as part of package trips.
Ryanair has previously strongly complained about OTAs selling its flights without permission.
Miners support FTSE 100 but hotel chains struggle, Royal Mail owner up 6%
Tuesday 23 January 2024 10:23 , Graeme Evans
Shares in the UK’s largest pawnbroker H&T today fell sharply after it reported that record profits for 2023 will be 10% short of City hopes.
While the pawnbroking arm increased lending by 19% to £260 million in the year, the trend towards lower priced jewellery and watches in the run-up to Christmas meant retail sales dropped 3% in the fourth quarter.
AIM-listed H&T fell 14% or 54.8p to 343.2p, the lowest level in over a year.
Elsewhere on the London market, the biggest upward moves were by mining and Asia-focused stocks after China pledged action to stabilise market confidence.
The potential boost to the demand outlook meant Anglo American led the FTSE 100 index with a gain of 3% or 51.2p to 1802.4p while Prudential lifted 14.6p to 811p.
In contrast to a 2.6% rebound for Hong Kong’s Hang Seng index and last night’s Wall Street highs, London’s top flight stood 6.15 points lower at 7481.56.
On the fallers board, hotel chains Whitbread and IHG were 1% lower while caterer Compass dropped 38p to 2127p after HSBC removed its “buy” stance.
The FTSE 250 index consolidated yesterday’s 1% rise with a fall of 3.76 points to 19,701.88. Royal Mail owner International Distributions Services rose 6% or 14p to 268.3p as investors awaited Ofcom’s view on reform of the postal service.
Premier Foods edged up 0.4p to 140.6p after the Mr Kipling and Bisto maker reiterated profit guidance on the back of a 14% rise in Christmas quarter sales.
Public borrowing a 'scant reward' for Tory electoral hopes
Tuesday 23 January 2024 09:41 , Daniel O'Boyle
Charles Hepworth, investment director at GAM Investments, said better public borrowing figures are unlikely to make a big difference for the Conservative Party electorally: "An improvement in the UK’s public finances at the end of last year will be a scant reward for the Tory bruising expected at the upcoming general election, whenever it is announced. More tax receipts, and lower inflation related interest rate payments, helped in bringing down overall borrowing in December to £7.8bn against forecasts expected to be almost £4bn higher.
"While the Office for Budget Responsibility (OBR) expected this fiscal year borrowing to be at £124bn upto this point, the government has undershot this by £5bn so far. This will cheer Tory MPs clamouring for what they think will be vote-saving tax cuts. At this point though, given the current polling, hope is a fool’s errand."
Lower interest payments may be offset by lower tax receipts
Tuesday 23 January 2024 08:31 , Daniel O'Boyle
Cara Pacitti, Senior Economist at the Resolution Foundation, says: “Lower-than-expected inflation late last year has reduced debt interest costs and given the Chancellor a timely fiscal boost ahead of his Budget in March.
“However lower inflation is also likely to mean lower tax receipts. How these factors offset each other will be important in deciding how much fiscal headroom the Chancellor has.”
Market snapshot: FTSE 100 higher
Tuesday 23 January 2024 08:24 , Daniel O'Boyle
The FTSE 100 is back over the 7500 mark in early trading this morning
Take a look at our full market snapshot:
Boohoo finance boss out
Tuesday 23 January 2024 08:13 , Daniel O'Boyle
Boohoo chief financial officer Shaun McCabe quit with immediate effect this morning, "by mutual arrangement".
McCabe will be replaced by Stephen Morana, who was previously CFO of Zoopla, Betfair and Cazoo.
Mahmud Kamani, group executive chairman, said: "Stephen is a highly regarded finance director who is well known to boohoo, having previously served on our Board in a Non-Executive capacity for four years. He supported us through the IPO process and in our early years as a PLC. While the business has grown significantly since then, Stephen has a wealth of experience with global digital businesses and is therefore very well placed to support the strategy in pursuit of our growth ambitions."
The online fashion retailer has struggled in the post-pandemic era. It said today that trading is still in line with expectations.
Mr Kipling maker Premier Foods sells 4 million more mince pies as sweet treats fly off the shelves
Tuesday 23 January 2024 07:57 , Michael Hunter
It was an exceedingly good Christmas for Premier Foods, the maker of Mr Kipling cakes.
Sales of sweet treats at the FTSE 250 company rose by over a fifth, helping power an overall rise in revenue of over 14%.
The icing on the cake was its Cadbury Mini Rolls brand of confections, which helped sweeten sales by over 17%.. It also sold 4 million more mince pies this year.
That helped the St Albans based firm stand by its profit forecasts for the year,
Everyman profits grow despite strikes
Tuesday 23 January 2024 07:53 , Daniel O'Boyle
Profits at high-end cinema chain Everyman grew last year, despite the impact of Hollywood strikes on the film release calendar.
Underlying profits rose to £16.2 million, as revenue increased to £90.9 million.
“The Group's performance in H2 2023 was marginally affected by the well-documented WGA and SAG-AFTRA strikes, which led to certain key titles moving to 2024,” Everyman said. “The Board is pleased however to re-confirm market expectations for 2024 and has confidence in the prospects of the business moving forward.”
It said films next year including Wicked, Despicable Me 4, Paddington in Peru, Joker: Folie à Deux, Inside Out 2, Mufasa: The Lion King, Dune: Part II and an untitled Gladiator sequel should boost sales.
Crest Nicholson confirms profit warning as Farnham's Brightwell Yard development takes further toll in 'weak' housing market
Tuesday 23 January 2024 07:47 , Michael Hunter
Housebuilder Crest Nicholson has confirmed the impact of cost over-runs at a major brownfield development on its annual results, following a profit warning last week.
The FTSE 250's Brightwells Yard development in Farnham in London's commuter belt generated further costs of £11 million in the year. It will cost a further £2.5 million to complete and a review of other sites has identified other costs of £5.5 million in total.
Full-year revenue dropped by almost 30% to at £657.5 million and profit crashed to £41.4 million from £137.8 million in what it "reflecting the weakness in the housing market".
There was an exceptional charge of £13 million, "in respect of a legal claim recently received relating to 2021 fire damage of a low-rise bespoke apartment scheme".
Peter Truscott, CEO, called the results "disappointing".
He said: "We have proactively streamlined the business to align with the challenging trading environment and have taken decisive measures to address operational challenges associated with Farnham and other legacy sites, implementing strategies to control costs and ensure a more precise and feasible path towards projects completion."
Tuesday 23 January 2024 07:36 , Simon Hunt
Southend Airport has been plunged into a debt crisis after its owner Esken faced demands to urgently repay a near £200-million loan, the firm warned today.
Lender Carlyle Global Infrastructure said the £194 million convertible loan, which had been set to mature in August 2028, must now be repaid by 16 February -- a deadline of a little over three weeks -- after it accused Esken of breaching the terms of the debt deal.
Esken warned that forcing through the repayment would have "significant adverse implications" for the airport and would be "value destructive for all stakeholders."
The company said it has a 'robust position in relation to the claim' and was 'investigating the validity of alleged breaches' of the loan terms.
Esken has been seeking a buyer for Southend Airport since June last year, after it warned on the stability of its finances.
In 2022 the firm arranged a £50 million borrowing facility to keep its finances afloat. If unpaid, the convertible loan will turn into equity and could allow CGI to mount a takeover of the airport.
Chancellor's "wiggle room" may not be so large
Tuesday 23 January 2024 07:34 , Daniel O'Boyle
Michal Stelmach, senior economist at KPMG UK, warned that the Chancellor's "wiggle room" for tax cuts or spending may not be as large as it first appears.
He said: “The wiggle room could easily be squashed if some of the downside risks materialise. The government’s implicit commitment to freeze fuel duty rates lowers revenue by £6 billion a year relative to current plans, while the assumption that real spending on unprotected departments would have to fall by over 2% a year is largely unrealistic in the absence of significant productivity improvements.
"That’s before considering the longer-term pressures from an ageing population, energy transition, and slowing workforce growth.”
Hipgnosis accuses founder of "cherry picking" songs for $465m sale
Tuesday 23 January 2024 07:31 , Daniel O'Boyle
Music rights fund Hipgnosis says its board is investigating claims its founder and investment adviser Merck Mercuriadis “cherry picked” the fund’s best songs in a controversial sale last year to another fund he partially controls.
The Hipgnosis fund aimed to sell $465 million worth of songs by artists such as Nelly, Rick James and Shakira to an unlisted fund run by Mercuriadis' Hipgnosis Songs Management and owned by Blackstone last year. At the time, the fund said its market value did not reflect the true worth of its assets.
However, now the fund says two independent research reports claim the songs in question “were growing at materially higher rates to the overall portfolio and were therefore ‘cherry picked’”.
“The newly constituted board is investigating whether this is the case, and if so, whether this was properly and fully disclosed to the previous Board in the investment papers, which included the recommendation provided by Hipgnosis Song Management, and therefore whether the previous Board were provided with the relevant information to enable them to make a decision in the best interests of shareholder,” the fund’s board said.
Primark on the up thanks to Rita Ora
Tuesday 23 January 2024 07:27 , Simon English
Primark enjoyed a good Christmas partly thanks to leisure and tailored clothing in the Rita Ora collection, the singer who has a deal with the budget fashion chain.
In the 16 weeks to January 6 retail sales were up 7.9% to £3.37 billion, a sign that Primark's popularity is undimmed. It was also able to raise margins at the clothes business.
The company did admit that Christmas sales had a a slow start due to "unseasonal warm weather".
Primark is part of the giant Associated British Foods group which owns Twinings tea and Silver Spoon sugar.
Overall sales for the company rose 5.4% to £6.88 billion. Ovaltine did well in Europe but was weaker in Asia.
The statement to the stock market said: "The Group continues to trade well. We continue to look forward to a year of meaningful progress in both profitability and cash generation, with the profitability improvement being driven by a recovery in Primark margin."ABF, a FTSE 100 company, is likely to see shares rise today.
£20bn of headroom for tax cuts?
Tuesday 23 January 2024 07:24 , Daniel O'Boyle
Ruth Gregory, deputy chief UK economist at Capital Economics, says: "December’s better-than-expected public finances figures brought some cheer for the Chancellor after the recent run of poor outturns and will give him a bit more wiggle room for a big pre-election splash in the Spring Budget on 6th March."
"After nine months of the 2023/24 fiscal year, borrowing is on track to undershoot the OBR’s full-year borrowing forecast of £123.9bn by £5.0bn. What’s more, with market interest rate expectations and long-dated gilt yields having fallen since November, we suspect the OBR will revise down its borrowing forecast significantly from 2025/26. That may provide the Chancellor with 'headroom' against his fiscal mandate of about £20bn in the Budget."
Asia markets higher on China support hopes, Wall Street sets new records
Tuesday 23 January 2024 07:16 , Graeme Evans
Asia shares today rallied on speculation that China is preparing a package of measures worth 2 trillion yuan (£220 billion) to stabilise its stock markets.
Hong Kong’s Hang Seng index, which has fallen more than 10% so far this year, jumped 3% and the Shanghai Composite improved 0.5%.
In Tokyo, the Nikkei 225 closed slightly lower after the Bank of Japan continued its ultra-dovish policy by leaving its short-term interest rate at -0.1%.
Lower-than-expected oil prices meant the central bank revised its inflation forecast for the next financial year to 2.4% from 2.8% projected in October.
The FTSE 100 index finished yesterday’s session 25.78 points higher at 7487.71 and is forecast by CMC Markets to add another 15 points at the opening bell.
The improvement comes after US markets picked up where they left off on Friday by setting fresh highs, with the Dow Jones Industrial Average and S&P 500 index up 0.4% and 0.2% respectively at the closing bell.
Public borrowing lowest for December since 2019
Tuesday 23 January 2024 07:04 , Daniel O'Boyle
The UK Government borrowed £7.8 billion in December, the lowest for the final month of the year since before the Covid-19 pandemic.
The total was less than half the amount borrowed a year earlier.
A major reason for the decline was a sharp decline in interest paid on RPI-linked gilts as inflation came down.
The lower borrowing figures may provide Jeremy Hunt with some room for tax cuts at the last Budget before the election, though economists have warned that the scope for giveaways likely still remains limited.
Recap: Yesterday's top stories
Tuesday 23 January 2024 06:44 , Simon Hunt
Good morning from the Standard City desk.
Jeremy Hunt is hoping to recreate the Eighties “Lawson boom” with tax cuts in the March Budget, according to one particularly lurid splash headline in the Sunday papers.
Be careful what you wish for.
The Chancellor is old enough and — I assume — well versed enough in recent British economic history to know that it did not end well, either for the UK, or for the reputation of his Tory predecessor.
Hunt has many difficult tasks ahead of him as he plans for the March Budget. But “doing a Lawson” is surely not a solution for any of them.
In his 1987 and 1988 Budgets, Nigel Lawson slashed the standard rate of income tax from 29p to 25p, in two steps, and the top rate from 60% to 40%.
Within months of the 1988 budget, interest rates had doubled and the path was set for a nasty recession in the early Nineties that brought back the scourge of mass unemployment. The downturn also shattered the housing dreams of millions of homeowners when collapsing prices left them with deep negative equity that condemned tens of thousands to repossession.
Hunt has many difficult tasks ahead of him as he plans for the March Budget. But “doing a Lawson” is surely not a solution for any of them.
Here's a summary of our other top stories from yesterday:
The number of UK companies in “critical financial distress” jumps to 47,000 - of which 14,000 are in London - says alarming report from insolvency specialists Begbies Traynor
AI firm 11Labs founded by 29 year old hits $1 billion valuation after fresh funding round
Fortnum & Mason profits rise to £7.5 million but boss warns of “challenging” trading conditions
S4 Capital boss Sir Martin Sorrell warns of tough year ahead
Compass buys Royal Opera House caterer CH&Co in £475 million deal
And...why the government's 99% mortgage plan would be a disaster for the housing market
