Yahoo Finance FTSE 100 Live 26 June: Blue-chips finish lower, AO World profits surge, Phoenix mulls SunLife sale
AO World’s big jump in profits and the possible sale of SunLife are among today’s City developments.
FTSE 250-listed AO, which sells washing machines, fridges and laptops, posted sales of just over £1 billion and said profits quadrupled to £34 million.
Phoenix Group, the FTSE 100 pensions and savings business with over £280 billion in assets under management, said it had received expressions of interest for SunLife.
FTSE 100 Live Wednesday
AO World profits surge
Phoenix mulls SunLife sale
Liontrust posts full-year loss
FTSE finishes lower
16:42
The FTSE 100 ended the day lower, finishing down 22 points to 8,225, after companies saw early morning gains pared back later in the session.
That include e-commerce firm AO World, which started the day up 5% on the back of bumper profits, but was back down to a 1% rise at the end of the day.
Smaller rival Marks Electrical, which jumped as much as 10% after 8am, was barely into positive territory by 4:30pm.
Julie Palmer, partner at Begbies Traynor said: “After a challenging period for the white-goods retailer, AO’s latest results reflect the successful execution of a much-needed turnaround.
“In the short-term, it’s a much better outlook, but the real test is whether it can maintain this momentum long-term. It has to demonstrate that this return to form is sustainable and that it still has the ability to attract new customers in a highly competitive market. For now, we will have to wait and see.”
Haleon sells nicotine replacement therapy business outside of US for £500m
16:00 , Simon Hunt
Sensodyne and Panadol maker Haleon has agreed to sell its nicotine replacement brands outside of the US for £500 million, as part of ongoing efforts to trim down its consumer health portfolio.
The healthcare giant said it was selling its nicotine replacement therapy business to a division of Indian drugmaker Dr Reddy’s Laboratories.
It includes brands Nicotinell, Nicabate, Habitrol and Thrive which are sold as lozenges, patches and gum in different strengths and flavours.
Investment giants to merge in boost to the City of London
15:29
FRESH signs of a return to deal making in London emerged today when two of Britain’s oldest fund businesses unveiled a £5 billion merger.
Alliance Trust, around since 1888, and Witan Investment Trust, around since 1909 are to join forces.
That could be a boost to the investment trust sector in general, which is fighting for relevance in the modern investing world in which there are scores of products competing for attention.
Witan will roll its assets into Alliance to forge the deal.
The aim is to create a “one-stop shop” for retail investors to invest in global equities called Alliance Witan.
Stocks edge back on Wall Street
14:40 , Simon Hunt
US shares slipped back in the opening minutes of trade on Wall Street as yesterday’s tech stock rally appeared to grind to a halt.
The S&P 500 fell 8.6 points at the open to 5460.71, while the Nasdaq Composite dropped 20.4 points to 17697.265 at the opening bell.
Fedex was the biggest gainer, with its shares rocketing more than 12%, after its profits surpassed analyst expectations.
Fund giants merge to create new FTSE 100 player
14:31 , Simon English
FRESH signs of a return to deal making in London emerged today when two of Britain’s oldest fund businesses unveiled a £5 billion merger.
Alliance Trust, around since 1888, and Witan Investment Trust, around since 1909 are to join forces.
That could be a boost to the investment trust sector in general, which is fighting for relevance in the modern investing world in which there are scores of products competing for attention.
Witan will roll its assets into Alliance to forge the deal.
The aim is to create a “one-stop shop” for retail investors to invest in global equities called Alliance Witan.
Dean Buckley, chairman of the Dundee-based Alliance, said: “Shareholders will benefit from access to the proven investment process implemented by our investment manager, Willis Towers Watson, and access to the world’s leading stock pickers.”
He said the deal is a “key milestone” for the industry. He claims it will lead to lower charges for investors.
The combined company will be big enough to get into the FTSE 100.
Alliance shares rose 0.7% to £12.10 to value it at about £3.4 billion. Witan rose 4% to 271p to give it a market capitalisation of more than £1.6 billion.
The sector has already seen consolidation, and this deal is unlikely to be the last. It is the largest so far, however.
The deal follows a strategic review in March after Witan CEO Andrew Bell announced plans to retire.
Laith Khalaf, head of investment analysis at AJ Bell, said: “This is a blockbuster merger of two of the biggest and oldest names in the investment trust world. The deal will result in lower annual charges for investors, as well as preserving the long dividend track records of both trusts. The share price of both trusts rose on the back of the news, especially Witan, which suggests the market thinks the deal provides decent value to both sets of shareholders.”
City Comment: The betting scandal makes no sense in the City
14:29 , Simon English
What’s the greater offence, placing a bet on when a general election will be held on the back of insider information, or betting on yourself to lose in that same election?
In the City, the view is clear. The first is very naughty, and if you get caught, you lose your job and go to prison.
The second is just business as normal, what’s the fuss?
Kevin Craig, suspended yesterday as the candidate for Labour in Central Suffolk and North Ipswich, says he placed the bet a few weeks ago when “I thought I would never win this seat”.
That’s not an insider information trade, that’s a financial and emotional hedge, like betting England will lose a football match even though you are desperate for them to win.
This is what City investors do all the time.
Say they invest £10 million into Vodafone shares, convinced its shares will jump.
They might also place a smaller £1 million bet on Vodafone shares crashing. That way if bet number one is wrong, bet number two will cover off most of the loses; like an insurance policy.
That bet will be placed for the investor by a broker, Morgan Stanley, perhaps.
In these instances we can see that the difference between Morgan Stanley and Paddy Power is operationally small. They do the same thing.
One is a bunch of jumped-up bookies, the other a respected gambling firm with amusing marketing.
Of course, outside the City, where going short – betting against things – is not common practice, Craig’s decision looks ill-judged to say the least. Like he was somehow hoping to lose.
He wasn’t, he was just doing what the lads in cuffs and sleeves do all day.
Perhaps the rules here are just not clear enough. A simple one which says politicians are not allowed to bet on politics should remove the confusion.
In the meantime Mr Craig will have to live with what he calls a “stupid error”. If his foolishness means that seat stays Conservative, Keir Starmer will certainly agree.
AO World boss calls on next government to tap into ‘great minds’ in business
14:02 , Simon Hunt
The boss of online electricals retailer AO World has called on the next government to tap into the “tsunami of good will” among business leaders and engage with firms to help shape policies.
John Roberts, founder and chief executive of AO World, told the PA news agency that the party that wins the General Election on July 4 should gather business bosses from across the UK and empower them to help on a raft of issues, such as business rate reforms and the apprenticeship levy.
He has been a vocal critic of the apprenticeship levy, claiming it has “failed” and that its complexity has not delivered on the aim to boost the number of school leavers taking on apprenticeships.
He said the next government needs to talk to businesses about how to make the levy fit for purpose, and also to use the experience of those in the sector on issues and policies.
Revolution Beauty eyes makeover as it draws line under ‘challenging two years’
13:30 , Simon Hunt
Cosmetics brand Revolution Beauty has revealed it returned to a yearly profit as it sets its sights on a makeover under new management following a turbulent two years.
The company said it has drawn a line under the issues of the past, which included a dispute with its former boss and a spat with its shareholder Boohoo.
In its annual financial results published on Wednesday, it reported a pre-tax profit of £11.4 million for the year to the end of February, up from a loss of £33.9 million the prior year.
Sales edged up by just 2% year on year to total £191.3 million, which it said included the benefit of selling excess stock during the year.
Lunchtime update: Brent crude up and gold down as FTSE flat
12:50 , Simon Hunt
Midway through the day’s trading session in London, the FTSE 100 is relatively flat while Brent crude prices have risen 0.5% to top $85 will the gold dollar spot has fallen by a similar margin.
David Morrison, Senior Market Analyst at Trade Nation, said: “It’s worth considering what oil prices are telling us about the global economic outlook, rather than the other way round.
“They suggest that confidence took a sharp knock in the last quarter of 2023, and that while sentiment has improved it’s still some way below where it was in April. Is this a reliable interpretation? Well it’s not foolproof, but it does go some way to explain current sentiment which suggests uncertainty for second half of this year.”
Here’s a snapshot of the market:
Crispin Odey reveals £37 Million hit from misconduct allegations
12:07 , Bloomberg
Crispin Odey has disclosed a multimillion-pound hit to his finances from the closing of the namesake hedge fund he founded, further highlighting the fallout of recent sexual harassment allegations against him.
The tycoon’s top UK holding company for his stake in Odey Asset Management said this month that it wrote down £37.1 million through a goodwill impairment due to the winding down of the London-based investment firm he led for more than three decades, according to a registry filing.
The closing “has significantly impacted current and future profitability,” Odey Holdings Ltd. said in its latest accounts.
Royal Mail offer delivers £146m fees bonanza
11:32 , Simon Hunt
City advisers are in line for a first-class payday from the £3.6 billion takeover bid for Royal Mail’s owner led by Czech billionaire Daniel Křetínský, according to the full offer document posted today.
It revealed that fees would total £146 million for bankers, lawyers, brokers, public relations advisors and accountants
Křetínský’s bid vehicle will pay £89.1 million to bankers, lawyers, brokers, public relations advisors and accountants, while Royal Mail’s parent firm — International Distribution Services — will shell out £56.9 million. Banks working for the bidder include Barclays, Merrill Lynch, Goldman Sachs and BNP Paribas, as well as Citigroup and JP Morgan Cazenove.
The offer has been recommended by the board but is under review on national security grounds, since it would take the 500-year-old postal service under foreign ownership. It also faces the usual regulatory scrutiny on any major deal.
Investors — including tens of thousands of staff who received around 10% of shares when Royal Mail was privatised — will vote on the offer on the terms set out in today’s document.
Křetínský, also a co-owner of West Ham, already holds almost 28% of IDS. Its board backed the bid after he offered assurances, including a pledge to keep the Royal Mail’s name and UK HQ.
The offer is priced at 370p per share. The stock rose today, but stayed off the level of the bid, up 2p at 317p.
Comment: Betting against yourself? The City does this all the time
11:07 , Simon English
What’s the greater offence, placing a bet on when a general election will be held on the back of insider information, or betting on yourself to lose in that same election?
In the City, the view is clear. The first is very naughty, and if you get caught, you lose your job and go to prison.
The second is just business as normal, what’s the fuss?
Kevin Craig, suspended by Labour yesterday as its candidate for Central Suffolk and North Ipswich, says he placed the bet a few weeks ago when “I thought I would never win this seat”.
That’s not an insider information trade, that’s a financial and emotional hedge, like betting England will lose a football match even though you are desperate for them to win.
This is what City investors do
all the time. Say they invest
£10 million into Vodafone shares, convinced its shares will jump.
They might also place a smaller £1 million bet on Vodafone shares crashing. That way if bet number one is wrong, bet number two will cover off most of the losses; like an insurance policy.
That bet will be placed for the investor by a broker, Morgan Stanley, perhaps. In these instances we can see that the difference between Morgan Stanley and Paddy Power is operationally small. They do the same thing.
Of course, outside the City, where going short — betting against things — is not common practice, Craig’s decision looks
ill-judged. Like he was somehow hoping to lose. He wasn’t, he was just doing what the lads in cuffs and sleeves do all day.
Perhaps the rules here are just not clear enough. A simple one which says politicians are not allowed to bet on politics should remove the confusion. In the meantime Mr Craig will have to live with what he calls a “stupid error”. If his foolishness means that seat stays Conservative, Keir Starmer will certainly agree.
PZ Cussons and Future higher in FTSE 250, miners lead FTSE 100
10:21 , Graeme Evans
Deliveroo shares are 4% or 5.3p higher at 133.3p after Reuters last night reported takeover interest from US-based DoorDash.
The parties are said to have held talks last month, but were unable to reach agreement on a valuation. They have not commented on the speculation.
Deliveroo, which was priced at 390p when it made its £7.6 billion stock market debut in March 2021, had been trading at 150p in May.
Nasdaq-listed DoorDash is worth $45.8 billion (£36.2 billion), compared with £2.1 billion for Deliveroo.
Other big share price movers today included Future, with the digital magazine publisher and GoCompare owner up 7% or 73p to 1076p.
Future led the FTSE 250 index, which climbed 73.81 points to 20,437.24.
PZ Cussons rose 1.8p to 102.4p after the company behind consumer brands Imperial Leather and Carex said it expected to report annual profits in line with previous guidance at between £55 million and £60 million.
This is despite a 23% adverse currency movement in its biggest market of Nigeria since the Manchester-based company’s last update in April.
The FTSE 100 index added 47.71 points to 8295.50, lifted by improvements of about 2% for mining stocks Glencore, Rio Tinto and Fresnillo. On the fallers board, easyJet lost 2.7p to 460.9p.
AO World jumps in pivot to profitability
08:50 , Simon Hunt
AO shares rose as much as 5% when markets opened this morning as investors cheered the e-commerce firm’s drive towards greater profitability.
The Bolton-based seller of washing machines, fridges and laptops posted a 9% contraction in sales to just over £1 billion for the year to end March but pre-tax profits quadrupled to £34 million.
AO CEO John Roberts told the Standard: “Over the last 12-18 months we’ve had a clear strategy of pivoting the business towards profitable growth and you can see that in the numbers today.
“We’ve been removing from the business various different channels and activities that don’t contribute towards that. That process is now complete and we’re guiding double-digit sales growth for the year ahead.”
The stock is now up by nearly a third since the start of the year.
Roberts said tumble dryers had been among AO’s fastest-growing products, with sales more than doubling compared to last year. He added: “We’ve got the dullness of the Euros going on but TV sales are still up by a half.”
FTSE 100 higher, Future shares up 10% in FTSE 250
08:45 , Graeme Evans
The FTSE 100 index is 29.06 points higher at 8276.85, with miners Rio Tinto and Glencore among the stocks up by more than 1%.
British Gas owner Centrica also improved by 1.75p to 137.7p and Burberry by 9p to 981.6p.
On the fallers board, Phoenix Group shares dropped 2.5p to 524p after today’s announcement that it is considering the sale of SunLife.
The FTSE 250 index is 55.29 points higher at 20,418.72, led by a 10% bounce for the shares of magazine publisher and GoCompare owner Future. It surged 101p to 1104p.
Elsewhere, Deliveroo shares rose 4.5p to 132p after Reuters reported last night that the company has been the subject of takeover interest from US-based DoorDash. It added that talks have since ended.
SunLife put up for sale by Phoenix Group
07:26 , Michael Hunter
Phoenix Group, the pensions and savings business with over £280 billion in assets under management, has put one of its most famous brands up for sale.
SunLife specialises in insurance and equity release products for the over 50s, as well as funeral payment plans. It made profit after tax of £16 million in 2023.
Phoenix said today that SunLife “is no longer core to the delivery of its vision of becoming the UK's leading retirement savings and income business.”
It added that it had received “a number of initial expressions of interest from third parties.”
07:13 , Simon English
Troubled funds group Liontrust today saw hope for the near future due to a “change in investor sentiment” as banks cut rates and there is greater “political and fiscal certainty in the UK”.
CEO John Ions says: “There is no doubt that the amount individuals are investing has been negatively impacted by the cost of living, the reductions in Covid savings and tax rises. With more stability will come greater recognition of valuation opportunities especially in the UK stock market.”
The fund manager falls to a loss of £0.6m and funds under management plunge 11% to £27.8bn. Liontrust has seen investors pull money due to its own performance issues too.
Ions admitted: “The negative investor sentiment has combined with a market environment over the past 18 months that has proved a significant headwind for many of our strategies and led to net outflows of £6.1 billion across the whole financial year for Liontrust. This market environment has also prompted many commentators to again question the value of active asset management.”
FTSE 100 seen higher, Nvidia leads US tech sector recovery
07:06 , Graeme Evans
The divergence of US markets continued yesterday as a 7% rebound for $3 trillion company Nvidia helped the S&P 500 index close 0.4% higher.
The Nasdaq Composite also jumped 1.3% amid the tech sector recovery, whereas the Dow Jones Industrial Average closed 0.8% lower.
London’s FTSE 100 index declined 0.4% yesterday but futures trading is pointing to a rise of 24 points to 8272 at today’s opening bell.
The renewed demand for technology stocks benefited Japan’s Nikkei 225, which rose 1.3% in contrast to flat trading elsewhere in Asia.
Brent Crude is at $85.35 a barrel this morning, with the pound at $1.268.
Recap: Yesterday's top stories
06:53 , Simon Hunt
Good morning from the Standard City desk.
The roller coaster that has been mortgage interest rates over the past two years appears to be on the brink of a new downward lurch. Yesterday, HSBC followed Barclays in cutting the cost of much of its range of home loans and the other big high street players are sure to fall in line over the coming days and weeks.
The new hope for borrowers comes after swap rates began to ease after last week’s “doveish hold” from the Bank of England. It takes a few days but that usually feeds through to the fixed rates that banks and building societies can offer their customers — and so it has come to pass.
The talk of decisions by several MPC members being “finely balanced” has finally persuaded the markets that August really is in play for the first cut in interest rates in a year.
It feels we have been here many times before of course. The markets were convinced at the start of the year that rates would be cut hard and fast through 2024. It did not happen, largely because the war against inflation took so much longer than expected to be won. Perhaps it is not over yet.
~
Here’s a summary of our top headlines from yesterday:
Women in UK’s finance industry still earn 22% less than men on average, according to Spendesk research
Struggling small business lender Funding Circle sells its US operations for just £30 million in bid to keep itself afloat
London estate agents Dexters sees profits up 9% to £40.4m with letting leading the growth
Chapel Down puts itself up for sale to fund ambitious expansion plans including new winery and vineyards
Landsec snaps up extra 17.5% of Bluewater shopping centre for £120 million
And...Average price of a pint in central London soars 14% in a year from £5.90 to £6.75 after staff and enrgy costs surge, says survey. And drinkers warned there is more to come after wet winter
