Yahoo Finance FTSE 100 Live: Shares higher, pound up on US jobs report, WPP slides as tech slowdown hits profits
WPP shares have fallen sharply after the advertising and marketing group revealed delays in spending by tech sector clients.
A difficult week for global markets is ending with the FTSE 100 broadly flat ahead of this afternoon’s US non-farm payrolls report.
Wall Street has been cheered by updates by Amazon and gambling giant DraftKings, with both poised for big share prices gains later today.
FTSE 100 Live Friday
WPP cuts guidance on lower tech spending
Amazon shares surge after Q2 sales beat
Capita reveals £25m cyber attack cost
FTSE 100 closes up 0.5%
16:38 , Daniel O'Boyle
The FTSE 100 closed at 7,564.37 today, up 0.5%, rallying after the release of the US jobs report.
The weaker-than-expected jobs data suggests that the Federal Reserve is likely finished with its interest rate hikes, but with the country still adding jobs, it remains far from an economic slowdown.
That helped the FTSE to gain around 80 points in the last three hours of trading to finish the day ahead.
But after big falls on Wednesday and Thursday, the FTSE still finishes the week down 130 points.
Nigel Farage can bank with us, boss of London fintech Pockit says as it unveils $10 million raise
16:29 , Daniel O'Boyle
The boss of a London fintech has said Nigel Farage would be able to open an account with them after it unveiled a fresh $10 million funding round.
Virraj Jatania, the CEO of Pockit, which serves customers left behind by mainstream banks, said: “Whilst I personally may not agree with his views, Nigel Farage would be allowed a current account with Pockit and he could open one in only a few minutes.
“Over the past few weeks, Farage has successfully raised awareness of the impact of being de-banked and underbanked.
“We are committed to being the financial super app for low-income and underserved groups. This includes politically exposed persons (PEPs) and we provide advanced monitoring for this group, to help prevent any potential issues.”
US adds less-than-expected 187,000 jobs in July, but unemployment down again
13:32 , Daniel O'Boyle
The US added 187,000 jobs in July, according to the Bureau for Labor Statistics, less than the expected 200,000.
However, unemployment fell further to just 3.5%. The so-called ‘misery index’ of inflation plus unemployment in the US is just 6.5%, suggesting the country still appears to be on course for a ‘soft landing’ from inflation.
Payroll figures had repeatedly beaten expectations for much of the past year, but have no come in below expectations for the second straight month.
Richard Flynn, Managing Director at Charles Schwab UK, said: "Today’s jobs report is slightly weaker than expected. Last month’s results offered evidence that employment growth had begun to slow, and today’s numbers indicate that a downward trend may be in motion.
“While this should be encouraging for policymakers as they continue to battle sticky inflation, the Fed would likely prefer to see wage gains closer to 3%. Growth in the 4% region may not be enough to convince bankers that monetary policy is working, so further interest rate hikes may be around the corner.”
BA staff secure 13.1% pay increase and £1,000 one-off payment, says Unite
13:27 , Daniel O'Boyle
British Airways (BA) workers have secured a 13.1% pay increase,trade union Unite has said.
Staff at the airline will receive the pay increase over an 18-month period, as well as a £1,000 one off payment.
The pay offer was “overwhelmingly” accepted by Unite members after a ballot was held, the trade union added.
Unite general secretary Sharon Graham said: “This is a sizable pay increase which has been achieved by the hard work and dedication of the union’s reps and officers, hammered out in detailed negotiations.
Construction sector grows despite rate rises dealing ‘hammer blow’ to housing
12:50 , Daniel O'Boyle
The UK’s construction sector returned to growth in July as an uptick in commercial work offset sharp falls for residential housebuilding, as interest rate rises and cost-of-living pressures dealt a “hammer blow” to the housing market, an influential survey has found.
Builders saw delivery times shorten at the fastest rate last month since 2009.
The latest S&P Global/CIPS construction purchasing managers’ index scored 51.7 in July, up from 48.9 in June and the highest level for five months.
Shares start to slide
12:17 , Daniel O'Boyle
Take a look at our market snapshot as shares begin to slide. The FTSE 100 is now down almost 200 points for the week.
City Comment: Wilko’s demise proves it’s tough at the bottom
11:38 , Daniel O'Boyle
Rarely since the collapse of Woolworths in 2008 has news of the demise of a retailer triggered such groans of disappointment among friends and colleagues.
Wilko, which warned this week it could soon be forced to appoint administrators, may be scruffy, poorly stocked at times and incredibly badly lit, but it is undoubtedly much loved.
Intuitively a cost-of-living crisis should be a golden time for a discount retailer but not for family-owned Wilko, Its market is one of the most competitive in retailing with the likes of Poundland, Home Bargains and perhaps most aggressively of all B&M muscling in on its patch.
New apartments replace Hammersmith ‘eyesore'
10:55 , Daniel O'Boyle
ALMOST 100 new apartments have gone on the market at a major regeneration scheme at Hammersmith Town Hall.
The 99 homes launched this week by Fabrica, the private development arm of housing association A2Dominion, which worked alongside Hammersmith & Fulham council, start from £635,000 for a one-bed flat.
The apartments scheme, known as Artisi, forms part of the new Civic Campus on Kings Street.
The new neighbourhood replaces a brutalist “eyesore” extension of the Town Hall dubbed one of the ugliest buildings in London prior to its demolition in 2020.
It will also have a new five-screen cinema, concert hall and theatre, public rooftop café and sky bar, an art gallery, retail and flexible office space as well as affordable homes for local residents and a 665 sq m public piazza called Unity Square.
Flutter up 3% on results optimism, FTSE 100 steady
10:32 , Graeme Evans
Flutter Entertainment rose 3% or 395p to 15,035p after Wall Street’s DraftKings reported an 88% jump in second quarter revenues and raised its earnings guidance for 2023.
The update sent DraftKings shares up 12% in last night’s extended hours trading and fired up interest in next week’s results from Flutter and its Ladbrokes rival Entain.
Flutter’s FanDuel brand has enjoyed huge success since US gambling laws were relaxed in 2018, taking over 40% of the US online sports betting market.
The US division, which also includes the brands FoxBet and PokerStars, is expected to be profitable for the first time during the opening six months of the year having delivered revenues growth of 92% in the first quarter.
The performance and this autumn’s additional stock market listing in New York means shares are more than 70% higher over the past year.
Entain, which includes the BetMGM joint venture and was a bid target for DraftKings in 2021, rose 1% or 12p to 1393p.
The focus on the gambling sector came as London’s top flight ended a poor week 5.45 points higher at 7534.61.
Other risers included Rolls-Royce, which lifted another 4p to 196.2p after yesterday’s interim results boosted confidence in its longer-term recovery prospects.
Energy giants BP and Shell also rose 5.05p to 482.9p and 20.5p to 2359.5p respectively after Brent Crude finished a sixth consecutive week of gains at near $86 a barrel.
The FTSE 250 index rose 0.2% or 39.31 points to 18,872.78, with energy and materials engineering consultancy Wood Group up 2% or 3.7p to 161.5p after analysts at Jefferies upgraded to a “buy” recommendation with 210p target price.
Utility Warehouse business Telecom Plus also lifted another 48p to 1664p as it forecast more double-digit annual percentage customer growth for the current year.
Capita draws a line under £25 million cyber attack as it swings to half-year loss
09:58 , Michael Hunter
Capita, the outsourcing giant that administers London’s Ultra Low Emission Zone and the Congestion Charge, fell to a loss today, after a major cyber attack last year.
But the FTSE 250 company is confident it has dealt with the incident in March, which it said today would cost up to £25 million, “reflecting the complexity of the forensic analysis of exfiltrated data.”
For the six-months to the end of June, Capita reported a loss of almost £68 million, down from a profit of £0.1 million in the same period a year ago. It also reflected the cost of business exits and some writedowns.
Electric car registrations rocket in July
09:29 , Daniel O'Boyle
Electric car sales surged by 88% in July, with drivers registering a new one every minute the DVLA was open as the expansion of ULEZ approaches.
In total, 23,010 battery electric vehicles were registered, according to the Society of Motor Manufacturers and Traders (SMMT).
“While the growth in electric vehicles hitting UK roads is significant, it must move even faster if it is to outpace the rest of the market and enable the UK to meet ambitious but necessary environmental targets,” the SMMT said. “To get even more consumers to make the switch, every means of support must be provided.”
The EV surge helped overall vehicle registrations jump by 28.3% to 143,921 in July. After the sector was hit by supply chain issues, car sales have now risen year-on-year for 12 consecutive months.
Tech giants slash ad spend
09:10 , Simon English
A MAJOR pull back in spending by tech giants such as Amazon, Apple and Google led to a downgrade by WPP and raised uncomfortable questions about global economic growth today.
The world’s biggest ad company saw profits for the half-year tumble 51% to £204 million. Growth forecasts for the rest of the year were slashed to between 1.5% and 3% down from 3% to 5% before, causing City brokers to slash share price targets.
WPP shares tumbled 62p, 7%, to 787p. They were well over 1000p at the start of the year.
CEO Mark Read insists performance is “resilient” in all areas “except the USA, which was impacted in the second quarter by lower spending from technology clients and some delays in technology-related projects”.
He pointedly didn’t blame the shake-up at Elon Musk’s Twitter, now called X, for the US issues but City analysts aren’t so sure.
Last week S4 Capital, the tech focused ad rival set up by former WPP leader Sir Martin Sorrell issued its own profit warning as clients slashed marketing budgets.
US rival Interpublic voice similar concerns.
A looming US election is normally good for ad agencies. Read says this one, given Trump inspired confusion, could just hurt the world’s biggest economy, citing a downgrade on US debt from ratings agency Fitch just the other day.
In the UK, things look brighter. WPP has won new business from easyJet, Pernod Ricard and Lloyds Bank, as bank profits rise and consumer desire for a proper summer holiday grows.
Nevertheless, JP Morgan cut its target price for the shares from 1260p to 1200p.
In London, WPP’s offices are 60% full. Read says the “best creative work” is done when people are together in offices.
The cut back in big tech spending is a reflection of strong growth during Covid for Amazon and the others, says Read. “I don’t think we are heading for a recession. We are just a bit more cautious,” he told the Standard.
WPP has “exciting future plans” for AI, with robots already producing work for Nestle, Nike and Modelez.
“AI will be fundamental to WPP’s future success and we are committed to embracing it to drive long-term growth and value,” said the CEO.
Ad agencies are coming under pressure from watchdogs to make it clear when characters in ads are produced by AI so that people are aware they are being spoken to by a computer-generated image.”
Rob Newman, director of public affairs at the Incorporated Society of British Advertisers, said this summer: “The public deserves transparency — from it being clear when you’re being advertised to, to being sure that the voice doing the advertising is that of a real person.”
This week WPP backed out of a relationship with GB News following feedback from staff and other clients.
The half-year dividend is held at 15p, offering some reassurance to investors.
Rugby boost to Royal London
09:09 , Simon English
WOMEN’S Lions sponsor Royal London is winning business from companies keen to hand over responsibility for managing workplace pensions.
The mutual insurer said half-year profits rose by £18 million to £127 million, suggesting last year’s botched merger with LV= wasn’t necessary in the first place.
That deal collapsed in acrimony.
Barry O’Dwyer, chief executive, said: “Our success in Workplace Pensions is driven by employers increasingly valuing the benefit as a key way of supporting their employees’ financial wellbeing. As a result, they are choosing to partner with digital first providers with a strong sense of purpose.”
Royal London said its “flagship” investment plan, the Governed Range, attracted £1.7 billion in new funds.
He added: “As many of our customers continue to come to terms with the increased cost of living and higher interest rates, our priority has been to help them navigate these challenges, while building their long-term financial resilience.”
FTSE 100 holds firm, WPP shares slide 7%
08:54 , Graeme Evans
The FTSE 100 index is broadly unchanged at 7527, with traders reluctant to take new positions until this afternoon’s US non-farm payrolls report.
The strongest performances came from the gaming sector after Flutter Entertainment rose 3% or 395p to 15,035p and Entain by 16p to 1397p.
Advertising and marketing group WPP fell 7% or 60.4p to 786.8p after it downgraded revenues guidance for this year due to delays in spending by tech sector clients.
The FTSE 250 index rose 0.2% or 44.76 points to 18,878.41, with energy services group Wood up 3% or 5p to 162.8p after analysts at Jefferies upgraded the stock to a “buy” recommendation with 210p target price.
Utility Warehouse business Telecom Plus also lifted 34p to 1650p as it forecast more double-digit annual percentage customer growth for the current year.
Market snapshot
08:45 , Daniel O'Boyle
Take a look at the key market data.
Amazon shares surge after Q2 sales beat
08:02 , Graeme Evans
Amazon shares jumped 9% in Wall Street extended hours trading after the technology giant reported second quarter net sales well ahead of expectations at $134.4 billion (£105.3 billion).
The improvement from $121.2 billion the year before included a 12% rise at cloud-based Amazon Web Services (AWS) to $22.1 billion (£17.4 billion) amid the surge in interest for products and services relating to generative AI.
The AWS segment’s slightly lower operating income of $5.4 billion (£4.2 billion) accounted for the bulk of the overall $7.7 billion (£6 billion) figure, which was more than double the second quarter result of 2022 after a big turnaround in the core retail operation.
The International division narrowed its loss to $900 million (£707 million) and North America returned to profit with a surplus of $3.2 billion (£2.5 billion).
Hargreaves Lansdown analyst Sophie Lund-Yates said the continued AI excitement had shown up in the numbers, but the impact of higher borrowing costs on consumer spending means not let-up in the pressures facing Amazon.
She added: “With US core inflation still at stubbornly high levels, finding ways to keep the support beams under retail profits from buckling could be a tough ask.”
Recruiter Parity cuts jobs as tech slowdown hits revenue
07:42 , Daniel O'Boyle
Tech recruiter Parity will cut jobs as a slowdown in hiring in the sector means that its revenue will be lower than previously expected.
The tech sector has been hit with a wave of high-profile layoffs and hiring freezes over the past year, which has hit Capita’s business.
It said: “In line with many others within the recruitment sector, Parity has seen market conditions become more challenging over recent months with economic uncertainty resulting in clients and new business opportunities deferring hiring decisions.”
At the same time, the business said it has “a significant opportunity” for growth in the public sector, and so will focus more on that area.
“ As a consequence, the new business initiatives targeting the private sector, which included permanent recruitment services, have been scaled back and with a resultant reduction in headcount,” it said.
Big loss for Home REIT after flash property sale
07:23 , Simon Hunt
Beleaguered property investment trust Home REIT suffered another blow today after it made a big loss on the flash sale of 40 of its properties.
The firm said it had sold the units at auction for a combined £4.8 million, representing just 39% of their average purchase price.
Home REIT said the discount reflected “ the vacant status of the majority of the sale properties and their condition.” It added the buildings had been “identified as having limited prospects for income and capital return.”
US jobs report in focus after Amazon beats hopes
07:23 , Graeme Evans
A monthly jobs report is today expected to show the resilience of the US economy, with Wall Street forecasting no change in the 3.6% unemployment rate.
July’s non-farm payrolls figures should also reveal the addition of around 200,000 jobs, only slightly below the level reported for June,
A stronger-than-expected report will fuel expectations that the Federal Reserve may have to consider a further interest rate hike in September, adding to upward pressure on US yields after the sharp sell-off for bonds this week.
US stock markets steadied yesterday after heavy losses earlier in the week, with last night’s strong updates by Amazon and Apple likely to support sentiment today.
Amazon shares were 9% higher in after-hours trading, having beaten Wall Street expectations with second quarter net sales of $134.4 billion (£105.3 billion).
CMC Markets expects the FTSE 100 index to open six points higher at 7535. London’s top flight opened the week at 7694.
Morning refresh: what you need to know to start the day
06:47 , Simon Hunt
Good morning from the City desk of the Evening Standard.
Sterling took a hit yesterday after the Bank of England went back to a smaller, quarter-point rate hike, after talk into the meeting that it could go for a second successive half-point rise.
The pound fell by 0.6 cent to $1.2651, a drop of 0.5%, to its lowest level since late June. Rate rises at the BOE have supported the pound in 2023, leaving it up by around 4.5% in a year.
After news of the 6-to-3 vote on the 9-member Monetary Policy Committee, sterling looked somewhat exposed, even as the BOE signalled that it could leave rates higher for longer.
Overnight, Amazon shares surged by as much as 10% in after-market trading on Wall Street, after the e-commerce giant posted bumper profits way ahead of analysts expectations, in signs its wave of spending cuts and layoffs was beginning to improve its bottom line.
Here’s a summary of our other headlines from yesterday:
Next cheers City with better than expected sales boosted by warm weather earlier in summer
New Rolls-Royce boss delivers bumper first half profits of £673 million
LSEG see half year income up 12% to £4.17 billion offering hope that London is far from finished as a financial centre
BUPA warns it faces a financial hit of over £200 million after a Supreme Court ruling in Chile.
Wilko on the brink of collapsing into administration with 12,000 jobs at risk
This morning we’re expecting results from contractor Capita and advertising business WPP.
