Yahoo Finance FTSE 100 Live: TSB fined over IT failure, Japan policy shift hits markets
Shares in Tokyo have fallen sharply after an unexpected move by the Bank of Japan signalled the beginning of the end for the country’s ultra loose monetary policy.
The bank kept its benchmark interest rate unchanged but increased the upper limit of its tolerance band on 10-year government bonds to 0.5% from 0.25%.
The move took Asia markets by surprise, with the Nikkei 225 down 2.5% by the close and leading technology stocks off by as much as 5%.
FTSE 100 Live Tuesday
TSB given £48.6 million fine for IT meltdown
Bank of Japan policy change surprises markets
Sam Bankman-Fried agrees to be extradited to the US
US stocks stay flat after surprise Bank of Japan move
Tuesday 20 December 2022 15:02 , Simon Hunt
An unexpected adjustment to monetary policy from the Bank of Japan has helped US stocks stay flat in the opening minutes of trade on Wall Street.
The Japanese central bank today announced a change in policy that would see long-term interest rates rise more.
The Dow Jones Industrial Average fell 0.07% at the open to 32,735.24, while the S&P 500 fell 0.19% and the Nasdaq Composite gained 0.04%, to 10,709.29.
High gas prices more than a one-winter problem, says energy market expert
Tuesday 20 December 2022 14:56 , Michael Hunter
Don’t expect high gas prices to be a one-winter problem, with Russia’s invasion of Ukraine and the ongoing war likely to have a longer-term impact, according to research from a leading figure in the energy market.
Cornwall Insight warned today that the high prices seen this year are unlikely to return to “pre-2021 ‘normality’” this decade, although a supply shortage this year is unlikely.
“In all scenarios, gas prices in the UK are projected to continue to be impacted as the country’s heavy reliance on imported gas sees it vulnerable to global rises,” the consultancy warned.
“High prices, relative to pre-2022 levels, are unlikely to be a single winter problem, with high winter gas prices forecast to be maintained in 2023-24,” it said. For this year, it pointed out that the National Grid forecast that the UK had sufficient liquified natural gas (LNG) cargoes to last the current winter.
But with competition to secure LNG supplies likely to increase as supplies to Europe of piped Russian gas fall even further in 2023, “there are risks of continued high gas prices and sustained elevated bills for consumers as we prepare for, and then move through, next winter” and beyond.
Wall Street stocks set to slip further as losing streak looks stubborn amid inflation fears
Tuesday 20 December 2022 14:11 , Michael Hunter
New York stocks were expected to fall further in opening trade after falls across much of Asia and Europe followed an unexpected adjustment to monetary policy from the Bank of Japan.
The move set the tone to trade across global markets, and was being seen as a signal that policymakers were becoming concerned that inflation was becoming more entrenched. While technical in nature -- the BoJ upped the upper limit of the yields on benchmark 10-year bonds it tolerates -- no changes were expected until into 2023.
Ahead of the start of US trade, the S&P 500 was expected to fall by around 9 points to 3860.50.
Amazon reaches settlement with European Commission to open up access to its ‘Best Buy’ box
Tuesday 20 December 2022 13:45 , Michael Hunter
Amazon, the online retail giant, has reached a deal with the European Commission to end a long-running investigation into how the firm uses data and the ways in which it offers space to companies using the site to reach customers.
The settlement means more equal treatment for sellers and will make thousands of products more visible on the site alongside in-house products or those sold by companies with deeper commercial relationships with the US behemoth.
It will open up access for independent firms to the site’s “Best Buy” box, which is one of the most prominent parts of its display to customers. It will also put a stop to Amazon using non-public data about the firms that sell on its site to define how it chooses which competing products to offer to purchasers.
It will also mean that outside vendors get access to Amazon’s Prime sales mechanism even without them using its own in-house logistics arm. as long as they meet delivery terms and standards.
The deal means the US behemoth with avoid fines that could have reached billions, running up to a potential 10% of global revenue.
Margrethe Vestager, the European Commission’s executive vice-president in charge of competition policy, said: “Competing independent retailers and carriers as well as consumers will benefit from these changes opening up new opportunities and choice.”
Amazon said it was “pleased” to have “addressed the European Commission’s concerns and resolved these matters.”
Shares in FTSE 100 developers slip after Nationwide predicts 5% fall in house prices in 2023
Tuesday 20 December 2022 12:50 , Michael Hunter
One of the UK’s biggest mortgage lenders has predicted a “relatively soft landing” for the UK housing market, saying that prices are likely to fall by about 5%.
Nationwide said that it expects activity in the market to stabilise “modestly below pre-pandemic levels”, adding to forecasts for a drop in prices next year which have hit shares in housebuilders and other property stocks.
The predictions came from the customer-owned building society’s chief economist, Robert Gardner, alongside his look back at the price action in 2022, which was dominated by one event.
“The financial market turbulence which followed the mini-Budget at the end of September represented a major shock to the housing market,” he said adding: “The number of mortgage applications slumped towards the lows seen at the start of the pandemic as a spike in long-term interest rates quickly fed through to mortgage rates and fundamentally changed the affordability dynamic for prospective buyers.”
Since then, mortgage rates have kept away from levels nearer 6% than 5% that put home loans out of the reach of thousands of people and are generally accepted to represent stress in the market. While conditions have improved, Gardner pointed out: “mortgage rates are taking longer to normalise and activity levels in the housing market have shown few signs of recovery and house prices saw three successive monthly declines since September – the worst run since 2008.”
Housebuilders shares were lower on the FTSE 100 in afternoon trade, adding to wider losses over the year. Taylor Wimpey slipped by 1%, or 1p, to 99p. Persimmon fell 11p, or 0.9% to 1198p. Rightmove, the property website, was down 4p or 0.8% to 513p.
FTSE 100 midday movers: Ocado back at the bottom of the market
Tuesday 20 December 2022 12:17 , Michael Hunter
The rebound in metals prices helped a troika of mining stocks to podium places on the FTSE 100 leaderboard in midday trade, while there was a familiar name as the biggest single faller.
Chilean copper miner Antofagasta took the gold medal, with commodities trading house Glencore and fellow miner Fresnillo in second and third.
Ocado, the online grocer and e-commerce technology platform, once again made the biggest single fall. It has had a volatile run this year, and is often found at either end of the leaderboard amid a split in opinion on its prospects. Some view it as ripe for strong growth after a major deal took it into South Korean markets, while others argue it is already overvalued.
Bunzl shares slip after it sells UK healthcare products business
Tuesday 20 December 2022 10:21 , Michael Hunter
Bunzl, the supplier of business goods and packaging, announced the sale of its UK healthcare products business today, alongside the acquisition of four other companies.
The FTSE 100 constituent provides essential items from hard hats to coffee cups and sandwich boxes via 150 operating companies present in over 30 countries, with over 20,000 employees.
The new owner of its UK medical products business, which generated revenue of £216 million in 2021, will be Dutch firm Mediq. Bunzl bought Toomac Ophthalmic & Solutions of New Zealand; GRC, an Australian medical devices company; VM Footwear, a Czech protective bootmaker and PM Pack, a Danish packager. Terms were not disclosed.
Bunzle’s shares slipped 19p to 2813p, a decline of 0.7%.
FTSE 100 weakness continues, Petrofac falls 10%
Tuesday 20 December 2022 10:03 , Graeme Evans
An unexpected tweak in Japan’s monetary policy today led to some big market movements as the pre-Christmas flight from risk assets continued.
The Bank of Japan (BoJ) left interest rates unchanged but wrong-footed traders by allowing the upper limit on 10-year government bonds to rise to 0.5% from 0.25%.
Deutsche Bank said the move signalled the beginning of a potential end to Japan’s ultra-loose monetary policy, having been an outlier compared to other central banks embarking on their biggest tightening cycle in a generation.
Strategist Henry Allen added: “It’s important not to underestimate the impact this could have, because tighter BoJ policy would remove one of the last global anchors that’s helped to keep borrowing costs at low levels more broadly.”
The yen rose and technology stocks fell sharply in Tokyo as the Nikkei 225 closed more than 2.5% lower.
Susannah Streeter, senior markets analyst at Hargreaves Lansdown, said: “The decision is being read as a sign of testing the water, for a potential withdrawal of the stimulus which has been pumped into the economy to try and prod demand and wake up prices.”
The developments heaped more pressure on Asia markets after a surge in Covid cases fuelled concerns about China’s economic outlook. Wall Street is also on a four-day losing streak after last week’s hawkish interest rate projections from the US Federal Reserve.
The FTSE 100 index started the month at 7570 but hopes for a Santa rally have long since faded to leave the top flight near to 7300 soon after today’s opening bell.
The benchmark later recovered to 7349.37, representing a decline of 27.48 points, but with yield-sensitive stocks from the property sector under pressure as Land Securities dropped 2% or 14.8p to 600.8p and Segro fell 14.2p to 750.6p.
The FTSE 250 index declined 0.7% or 121.09 points to 18,527.87, led by Aston Martin Lagonda as a fall of 6.85p to 170.15p put the brakes on the car maker’s recent recovery.
Petrofac shares dived 6.95p to 65.4p in the FTSE All-Share after the energy services business forecast a full-year loss of $100 million. It has been hit by cost recovery challenges in engineering and construction, offsetting strong performances elsewhere.
Crussh puts itself up for sale after wave of store closures
Tuesday 20 December 2022 09:32 , Simon Hunt
The future of juice bar Crussh could be in doubt as the firm has put itself up for sale after closing stores across London, in a worrying sign for the health of the hospitality sector.
Known for its suite of healthy fruit-based drinks including the Crushberry Blast smoothie and the Incredible Bulk protein shake, Crussh is understood to have appointed consulting firm FRP Advisory to assess its options, according to hospitality newswire Propel.
The firm’s sales plummeted almost 80% to just shy of £3 million last year and losses hit £2.8 million, according to its most recent accounts filed with Companies House, as coronavirus restrictions slashed footfall and led to venues being shut.
The business, which operates in ten sites across London including in Bank and Canary Wharf, permanently closed 13 of its stores in the aftermath of the pandemic.
Crussh said in its annual report: “Management took action to reduce the size of the workforce, with significant cuts made in the own-stores headcount based upon the likely future estate size.
“The head office in Notting Hill has closed [and] directors have waived some or all of their salaries.”
Property stocks lead FTSE 100 slide
Tuesday 20 December 2022 08:56 , Graeme Evans
Just five stocks are in positive territory after the FTSE 100 index opened 0.75% lower, down 55.98 points at 7305.33.
Big fallers included in the property sector as British Land, Land Securities and Segro all dropped 3%. The fallers board was led by Ocado, which weakened 23p to 611p.
The FTSE 250 index also struggled, declining 1% or 196.68 points to 18,455.15 as shopping centre owner Hammerson lost 4% or 0.9p to 22.5p and Harbour Energy dropped 11p to 296.2p.
Sam Bankman-Fried agrees to be extradited to the US
Tuesday 20 December 2022 08:06 , Simon Hunt
Sam Bankman-Fried, the 30-year-old founder of collapsed crypto firm FTX, has agreed to be extradited to the United States to face fraud charges, according to reports in Reuters.
Earlier, the former billionaire’s lawyer told a judge in the Bahamas he was not ready to consent to the extradition.
It comes after the Securities and Exchange Commission accused Bankman-Fried of having orchestrated a years-long fraud to conceal from FTX’s investors the undisclosed diversion of FTX customers’ funds to Alameda Research LLC, his privately-held crypto hedge fund.
SEC Chair Gary Gensler said: “We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto.
FTSE 100 set to fall after BoJ move
Tuesday 20 December 2022 07:46 , Michael Hunter
European markets are set for a weak session after the Bank of Japan surprised markets with an unexpected tweak to its monetary policy settings.
CMC Markets expects the FTSE 100 index to open 60 points lower at 7301, a performance not helped by the impact of Wall Street closing lower for the fourth session in a row last night.
Michael Hewson, CMC’s chief market analyst, said traders had assumed policymakers would wait until early next year before acting.
He added: “It suggests that the Bank of Japan is starting to become concerned about policy lags and inflation becoming more entrenched.
“It also gives them more flexibility in 2023 in the event they need to start applying the brakes to prevent a significant overshoot in inflation, with the potential that we could see a rate hike before the end of next year.”
TSB fined almost £50 million for IT meltdown that locked 2 million people out of their accounts
Tuesday 20 December 2022 07:38 , Michael Hunter
TSB has been slapped with a fine of almost £50 million for the disastrous systems meltdown that left around two million customers locked out of online banking for weeks in 2018.
The IT collapse occurred when the bank was trying to move customers to a new platform, which had not been tested properly according to a subsequent report. The migration followed a change of ownership -- from Lloyds Banking Group to Sabadell, the Spanish group that bought TSB -- and during the crisis, TSB turned down an offer of help from its former parent.
Today, the Financial Conduct Authority fined TSB £48.6 million for “operational risk management and governance failures.” The City watchdog said TSB’s entire branch network and a significant portion of its customer base were affected by the problems and it took the bank until December 2018 to return to business as usual, with almost £33 million paid to customers in compensation.
The scandal led to the departure of Paul Pester as CEO.
Mark Steward, the FCA’s executive director of enforcement and market oversight, said: ““The failings in this case were widespread and serious which had a real impact on ... day-to-day lives.
“The firm failed to plan for the IT migration properly, the governance of the project was insufficiently robust and the firm failed to take reasonable care to organise and control its affairs responsibly and effectively, with adequate risk management systems.”
TSB’s CEO, Robin Bulloch, said:
“We’d like to apologise again to TSB customers who were impacted by issues following the technology migration in 2018. We worked hard to put things right for customers then and have since transformed our business.”
Surprise move by Bank of Japan triggers sell-off
Tuesday 20 December 2022 07:23 , Graeme Evans
Technology stocks led a sharp sell off for Tokyo-listed stocks this morning after the Bank of Japan wrong-footed markets with a surprise adjustment in monetary policy.
The bank left interest rates unchanged but announced that Japan’s ten-year yield would now be able to rise to around 0.5%, having been limited to 0.25% previously.
The Nikkei 225 closed 2.5% lower in the wake of the move and other Asia markets also came under pressure.
Deutsche Bank strategist Henry Allen said: “Bank of Japan has decided to adjust its yield-curve-control policy, which is widely seen as the beginning of a potential end to its ultra-loose monetary policy.
“That policy has made them a big outlier compared to other central banks this year, having maintained rates at the zero lower bound whilst others embarked on their biggest tightening cycle in a generation.
“Indeed, it’s important not to underestimate the impact this could have, because tighter BoJ policy would remove one of the last global anchors that’s helped to keep borrowing costs at low levels more broadly.”
