Yahoo Finance FTSE 100 Live: Wilko goes bust but no ‘immediate’ job losses, US inflation rises
The downward run for US inflation ended today, with the rate of price rises in July rising to 3.2%. But core inflation ticked slightly down to 4.7%, enough to reassure investors that the fed is done with rate hikes.
In London, housebuilder Persimmon was the latest housebuilder to be hit by the Bank of England’s rate rises, while gambling giant Entain put aside £585 million to settle an HMRC bribery investiation. Deliveroo, meanwhile, has upgraded earnings guidance and could soon pay its first dividend.
But the biggest UK business news concerns retailer Wilko, which has officially entered administration.
Administrators at PwC said there would be no store closures or “immediate” redndancies.
FTSE 100 Live Thursday
Wilko goes bust
Deliveroo lifts earnings guidance
Entain sets aside £585m for HMRC probe
Persimmon sticks to profit forecasts
US inflation up slightly
FTSE closes higher at 7,618.60
16:40 , Daniel O'Boyle
The FTSE 100 closed higher today, finishing at 7,618.60 after US inflation data suggested no more interest rate hikes from the Federal Reserve.
The idnex had been flat for most of the day before the US CPI reading this afternoon.
While inflation increased to 3.2%, the rise was slower than expected. Core inflation dipped slightly to 4.7%, which is likely enough to encourage the Fed to pause its rate hikes.
Burberry, Croda International and Flutter Entertainment were the top risers for the day. Rio Tinto and Spirax-Sarco were the big fallers.
West End Final: Why do Brits spend more than Americans for worse homes?
16:21 , Daniel O'Boyle
“The United States is richer than the United Kingdom,” Jack Kessler wirtes. “This is not a new phenomenon – indeed, we have fretted about it for more than a century, not least as we watched from afar as Americans got to enjoy all manner of time-saving devices while using what was left to dominate global affairs.
Still, UK economic performance since the 2008 global financial crisis has been abysmal. Productivity growth has flatlined, not exactly aided by the three economic shocks of Brexit, Covid-19 and Russia’s invasion of Ukraine. But while the US economy is now more than five per cent larger than pre-pandemic levels, the UK’s is still smaller. The result: Americans are on average 30 per cent richer than us.
“This is not at all esoteric. It means that the average American can purchase more goods and services than the typical Briton, with pretty wild effects. And with thanks to the excellent work of John Handley and the Social Market Foundation think tank, today’s newsletter looks into what exactly those are, with a particular focus on housing.”
Read the full West End Final newsletter from Jack Kessler
‘It gets better and better’ — Natwest is latest major lender to cut mortgage rates
16:11 , Daniel O'Boyle
Things are “getting better and better” for mortgage holders after months of bad news, as Natwest has become the latest lender to cut its rates.
Natwest follows Halifax, HSBC, Nationwide and TSB, among others, in bringing its rates back down after a wave of increases.
Rates had surged from late-June until late-July on the back of repeated disappointing inflation data, which led to fears that the Bank of England could raise interest rates as high as 6.75%. At one point, the average interest rate on a two-year fixed-rate mortgage hit 6.86%, the highest level since 2008, according to Moneyfacts.
But promising news on June inflation, which fell to 7.9%, has sparked a race back down for lenders. HSBC was the first to lower its rates, and has since been joined by all other major banks and building societies, with some decreasing their rates more than once.
City Comment: Want to ease the rental crisis? Give landlords a break
15:48 , Daniel O'Boyle
It has been a brutal year for private tenants and, as the father of a renter son, I have seen as first hand just how tough it is for young people to finding remotely affordable accommodation in London.
Few people shed tears for the landlords. But perhaps we should be just a little more sympathetic.
Latest figures from industry group UK Finance show that mortgage stress is at its most intense in the buy-to-let sector. The number of buy-to-let loans in arrears has rocketed by 59% over the past year, 28% in the second quarter alone.
Coach owner buys Versace parent company to create new US luxury fashion giant
15:41 , Daniel O'Boyle
Coach and Kate Spade owner Tapestry is to buy the company behind Michael Kors, Versace and Jimmy Choo, Capri Holdings, for $8.5 billion to create a new American luxury fashion giant.
Tapestry will pay $57 for each share of Capri, creating a business with global sales of more than $12 billion a year and annual profits of close to $2 billion.
The new company will be easily the biggest luxury fashion company in the US, and a rival to European giants like LVMH and Hermès International, which had huge success in recent years thanks to booming demand in Asia.
What went wrong at Wilko and what happens next?
15:35 , Daniel O'Boyle
Wilko has fallen into administration, more than 90 years after the chain began as a single hardware shop in Leicester.
Mark Jackson, the retailer’s boss, told staff it “left no stone unturned” in order to preserve the chain but has had to start insolvency proceedings after failing to secure a rescue.
The collapse comes amid a challenging backdrop for UK high streets, with footfall dropping as shoppers increasingly go to larger out-of-town shops and consumer budgets facing pressure from continued inflation and rising mortgage costs.
US shares rise
15:00 , Daniel O'Boyle
Take a look at our US market data as shares on Wall Street rise.
Big gainers today include Tesla and casino business Wynn Resorts. On the other hand, shares in Coach and Kate Spade owner Tapestry plunged as it announced a deal to buy rival Capri, which owns Michael Kors and Versace.
US stocks set to open higher as inflation rises by less than expected
14:00 , Daniel O'Boyle
US stocks are set to open slightly higher this morning following the news that inflation egded up to 3.2%.
The rise in inflation was slightly lower than expected, and core inflation ticked down, which should give traders hope that the federal Reserve will not need to raise interest rates again this year.
Dow Jones futures are up 0.5% to 35,390.00, while S&P 500 futures are up 0.6% to 4,513.25. Nasdaq futures, which include many of the most rate-sensitive stocks, aere up by 1% to 15,322.00.
US inflation ticks back up
13:45 , Daniel O'Boyle
US inflation ticked back up to 3.2% in July, in a sign that the world’s largest economy isn’t quite finished in its battle to bring prices back under control.
The figure was higher than last month’s 3.0%, but still well below the peak of 9.1% reached in June 2022.
An increase had been expected as much of the decline from recent months was due to comparisons with the sky-high energy prices of spring 2022, and the figure is slightly below economists’ projections of 3.3%.
No “immediate” redundancies or closures at Wilko
13:21 , Daniel O'Boyle
Administrator PwC said there will be no “immediate” redundancies or store closures as they take over the insolvent business.
Zelf Hussain, Joint Administrator and PwC partner, said: “It is incredibly sad that a well loved, family business that has been on the high street for over 90 years has had to go into administration today. I know the management team has left no stone unturned in trying to save the business.
“Many high street retailers are facing a number of well-documented challenges and Wilko has been significantly impacted by the headwinds facing the industry including inflationary pressure and rising interest rates.
“Wilko has been a staple of many British high streets for decades. We know that the appointment of Administrators, which comes during an already challenging time for many, will be an unsettling development for everyone involved with the business - particularly its committed team members - and the communities it serves.
“As Administrators we will continue to engage with parties who may be interested in acquiring all or part of the business. Stores will continue to trade as normal for the time being and staff will continue to be paid.”
Halifax and First Direct join other lenders in announcing mortgage rate cuts
12:42 , Daniel O'Boyle
Halifax and First Direct have joined a stream of major lenders in announcing cuts to their mortgage rates.
Halifax said it is reducing five-year fixed-rate mortgages by up to 0.71 percentage points, and two-year fixed-rate loans will fall by as much as 0.27 percentage points
The cuts will take effect from Friday.
Halifax is part of Lloyds Banking Group, which remained the UK’s biggest mortgage lender last year, lending £52.7 billion in 2022, according to figures from trade association UK Finance.
market snapshot with FTSE 100 flat
12:20 , Daniel O'Boyle
Take a look at all the key market data
Rail commuters face ‘new kick in teeth’ with hefty season ticket rise
11:57 , Daniel O'Boyle
Commuters face hefty rail fare increases next year which could add hundreds of pounds to season tickets even though inflation is falling.
Train prices are “already too high” compared with many other European countries, they stressed, and further rises would be a “kick in the teeth”.
They also slammed services that are often crippled by strikes, delays, cancellations and timetable cutbacks as poor “value for money”.
Wilko officially goes bust
10:49 , Daniel O'Boyle
Wilko has entered administration, putting 12,000 jobs at risk, after warning it was close to collapse last week.
CEO Mark Jackson said: “Over the past six months we’ve been open with all our stakeholders including our team members that we’ve been considering options to accelerate a turnaround plan given that we needed to make significant changes to the way we operate to restore confidence and stabilise our business.
“We left no stone unturned when it came to preserving this incredible business but must concede that with regret, we’ve no choice but to take the difficult decision to enter into administration.”
Ex-dividend stocks hold up FTSE 100, IHG shares up again
10:29 , Graeme Evans
A strong session for European markets bypassed London today. with the FTSE 100 index up by just 3.41 points to 7590.71.
About 10% of the top flight went ex-dividend, leaving the likes of Rio Tinto, AstraZeneca, HSBC and NatWest on the fallers board as they no longer traded with the value of their forthcoming dividend awards.
Alongside the ex-dividend stocks, Spirax-Sarco Engineering slumped 7% after it warned that destocking by biopharma customers will continue into next year.
The weaker outlook for its Watson-Marlow unit offset another robust performance by the 130-year-old company, whose steam and thermal solutions help to heat hospitals, produce food on an industrial scale or sterilise pharmaceutical equipment.
Half-year revenues were 13% higher at £850.8 million although profits fell 18% to £114 million due to comparisons with previous Covid vaccines work by Watson-Marlow.
An 8% hike in dividend to 46p a share extended the Cheltenham-based company’s 55-year record of growth, but the stock still fell 775p to 10,060p.
On the risers board, the post-results flight towards InterContinental Hotels continued after a further gain of 140p left the Holiday Inn operator at a new record of 6074p.
Chile’s Antofagasta also lifted 20.5p to 1627.5p as the copper miner’s half-year profits rose 13% to $764.5 million (£693.7 million) on higher sales volumes.
The price of copper fell 3.4% but the company’s boss said longer-term fundamentals remain strong with the metal set to be an integral part of the energy transition.
The FTSE 250 index rose 0.5% or 90.97 points to 19,028.17, driven by property-focused stocks as British Land lifted 6.3p to 336.8p and Warehouse REIT by 2.6p to 89.7p.
Among the small caps, online white goods retailer Marks Electrical added 4.5p to 99p after revenues growth of 30.7% for the April to July period.
The company said televisions, washer dryers and cordless vacuum cleaners had sold well, with its share of the major domestic appliance market up to 3% from 2.4% the year before.
Wilko could go bust today with 12,000 jobs at risk as last-minute rescue talks collapse
10:27 , Daniel O'Boyle
As many as 12,000 jobs could be lost as high-street chain Wilko is set to reveal this morning that it has gone bust.
The retailer, which has 400 shops including 26 in London, is set to be declared insolvent today, according to Bloomberg, after it filed a notice of intention to appoint administrators earlier this week.
When it filed the notice, there were still hopes of a last-minute rescue deal, but prospective buyers - including Laura Ashley owner Gordon Brothers - reportedly withdrew their interest.
Last week CEO Mark Jackson said: “While we can confirm we’ve had a significant level of interest, including indicative offers that we believe would meet all our financial criteria to recapitalise the business, at present, we don’t today have an offer that provides the necessary liquidity in the time we have available, given the mounting cash pressures that we’re faced with.”
City braces for insight into impact of rate hikes on economic growth
09:43 , Daniel O'Boyle
The impact of rising interest rates will be back under the City’s spotlight tomorrow, when the latest official numbers on the size of the economy are revealed.
All eyes will be looking for signs that the Bank of England’s long and hard-fought battle with inflation is affecting gross domestic product data, which tracks the value of all the goods and services the UK produces.
Friday’s reading – for the second quarter and the month of June – will also reflect the impact of the early summer heatwave, which helped retailers, and more strikes, that hit the transport sector and holidaymakers.
Ex-dividend stocks slow FTSE 100, Deliveroo up 3%
08:42 , Graeme Evans
A strong session for European markets failed to include the FTSE 100 index, which rose by a modest 13.81 points to 7601.11 due to the impact of a large number of ex-dividend stocks.
About 10% of London’s top flight went ex-dividend, meaning shares no longer carry the value of the next shareholder distribution. They included heavyweights Shell, Rio Tinto, AstraZeneca and HSBC.
The fallers board was led by Spirax-Sarco Engineering, which declined 5% or 575p to 10,260p following half-year results.
Persimmon shares were 19p higher at 1142.5p after reassuring investors with its half-year figures, but gambling group Entain lost 21p to 1337p.
Deliveroo’s increased guidance meant its shares rallied 3% or 3.6p to 127.1p, which compares with 83p seen in March.
Key market data as FTSE opens slightly higher
08:29 , Daniel O'Boyle
Take a look at our key market data as the FTSE rises slightly to 7600.
Deliveroo’s first dividend could be imminent -- Will Shu
08:21 , Simon Hunt
Deliveroo could be about to declare its first ever dividend after the meal delivery app cheered resilient customer demand.
The firm is preparing to issue a £250 million capital return to shareholders, with either a special dividend, a tender offer or a share buyback on the table as potential mechanisms.
CEO Will Shu told the Standard: “Given we’re well ahead we’re confidently saying we’re going to propose a return to shareholders.
“We’ve got our investment pot, we’ve got our rainy day fund and now we’ve got surplus money to give back.
“We’re going to be consulting with shareholders to figure out what works...typically the three options are a share buyback, a tender offer or a special dividend.”
The company said it will decide on a method for the capital return by September.
Deliveroo shares rose 3.3% to 128p.
Backpackers power record revenue at Hostelworld as bookings beat pre-Covid levels
08:01 , Michael Hunter
Gap-year travellers favourite Hostelworld reported record revenue today, helped by the end of Covid travel restrictions and the rebound in global travel.
The budget overnight stay specialist has over 16.500 hostels in over 180 countries and reported €339.5 million (£293 million) in net gross merchandise value, a key industry measure which tracks the value of bookings, deducting cancellations. It was up 57% year-on-year.
It said bookings in Central America, South Asia and southern European countries were all ahead of pre Covid levels.
Gary Morrison, COE, said: “ I am very pleased to see the global hostelling category showing double digit bednight growth year on year for the first half of the year, and even stronger growth from Hostelworld with the resumption of cross border travel”.
Copper giant Antofagasta reveals drop in average price of ‘the metal of electrification'
07:50 , Michael Hunter
Chilean mining behemoth Antofagasta revealed a drop in copper prices today, as demand faltered in the first half of 2023, highlighting concern over the performance of the global economy.
The operator of the Los Pelambres mine said copper prices fell by 3.4% to $3.99 per pound in the six months to the end of June. But higher sales volumes of the metal, and gold and molybdenumenum, which is used to make alloys, meant revenue rose over 14% to $2.9 billion (£2.3 billion).
Earnings rose 7.5% to $1.3 billion.
CEO Iván Arriagada voiced his faith in Antofagasta’s main product, saying: “Copper is the metal of electrification and therefore an integral part of the energy transition. We believe the long-term fundamentals for copper are very strong as demand is forecast to continue to grow over the coming years, and as incremental supply remains challenged”
Watches of Switzerland says UK and Europe revenue dip is just bad timing
07:47 , Daniel O'Boyle
UK and European revenue was down by 8% in the three months to 30 July at Watches of Switzerland, but the retailer said the decline was just due to timing.
The group made £219 million in Europe, but said it was hit by “the unwind of the product intake timing” which had boosted its results in the previous quarter.
Watches of Switzerland fared better in the US, with 10% revenue growth.
CEO Brian Duffy said: “Looking ahead, we expect to return to more normalised growth rates in the balance of the financial year. Our full year guidance for another year of strong growth remains unchanged, underpinned by our supply visibility, client Registration of Interest lists and strong pipeline of showroom openings, refurbishment and investment, as luxury watch demand continues to outstrip supply.
“We look forward to presenting our Long Range Plan update in the Autumn, which will outline our growth ambitions to FY28.”
Average house price rises over £250,000 at Persimmon as it sticks with profit forecasts
07:32 , Michael Hunter
The average selling price of a house built by Persimmon homes rose above £250,000 in the first half of 2023, even as Bank of England rate hikes and the demise of the government’s Help to Buy scheme piled pressure on the market.
Nonetheless, the York-based FTSE 100 developer reported an average price of £256, 445 in the six months to the end of June, up 4% year-on-year. For private sales, the average price rose 8% to £288,327, with a greater proportion of larger homes sold.
Revenue fell to £1.19 billion from £1.69 billion and profit before tax slumped 65% to £151 million. The number of completions was also down, to 4,249 from 6,652.
It said the drop in completions reflected “the lower forward order book coming into the year following the market challenges after last Autumn’s ‘mini-Budget’”
Dean Finch, CEO, said the firm was “on track” to deliver profit forecasts for the year, adding:
“Our pricing overall has remained resilient with continued positive momentum in the forward order book. However, the reduced volumes in the first half of the year has negatively affected our operating margins as we predicted earlier in the year. As we look forward, we expect increasing completions to result in improving operating margins.”
Entain puts aside £585m for HMRC bribery prove
07:26 , Daniel O'Boyle
Ladbrkes and Coral owner Entain has put aside £585 million to settle an HMRC bribery probe into the Turkish business it sold in 2017.
The betting giant is in negotiations over a deferred prosecution agreement, and while it is not final, it says it expects to have to pay more than half a billion pounds.
Entain shares plummeted two months ago when it revealed it was in talks over a settlement, but the figure reached is much larger than the £300 million or so that City analysts had predicted.
Deliveroo upgrades earnings guidance as losses narrow
07:25 , Simon Hunt
Food delivery app Deliveroo upgraded its guidance after a robust first-half performance saw its losses narrow.
The London-based firm said it would make pre-tax earnings of between £60-80 million, ahead of the £20-50 million it previously guided, after losses fell to £82.9 million from £153.8 million the previous year.
Deliveroo boss Will Shu said: "Over the last 18 months, Deliveroo has reached adjusted EBITDA profitability ahead of plan, and we are progressing towards our goal of generating consistent positive free cash flow. The industry is large and still early in its maturity, and we are excited by the growth opportunities ahead of us.”
US inflation seen higher, FTSE 100 set to fall
07:22 , Graeme Evans
The US annual inflation rate is set to show its first increase in a year today, with Wall Street expecting a figure of 3.3% for July compared with 3% the previous month.
The consumer prices index (CPI) has fallen from a peak of 9.1% in June 2022, but year-on-year base effects and higher fuel prices will mean an end to that trend.
The sharp fallback in inflation and signs of resilience in the jobs market have raised hopes that the US economy can achieve a soft landing after 2022’s price shock.
However, the threat of more Federal Reserve interest rate rises has not gone away and policymakers will be paying close attention to today’s core inflation figure excluding food and energy prices. This is due to be unchanged at 4.8%.
Wall Street markets showed their unease ahead of this afternoon’s release, with the Dow Jones Industrial Average and the S&P 500index down 0.5% and 0.7% respectively and the tech-focused Nasdaq Composite off 1.2%.
The FTSE 100 index rose 60 points yesterday but CMC Markets expects London’s top flight to open nine points lower at 7578 this morning.
Morning refresh: what you need to know to start the day
06:40 , Simon Hunt
Good morning from the City desk of the Evening Standard
25 million euros: that’s the cost just one holiday operator has said travel chaos caused by wildfires in Greece has led to over just a few weeks. That would suggest the total economic cost is set to be many multiples of this to the tourism industry. It’s one the industry could have to reckon with much more frequently if extreme weather events such as this one become more common in the years ahead.
Overnight Disney swung to a $460 million loss after it revealed it had shed more than 7% of its subscription base, a figure higher than analysts had expected. Shares nudged up slightly in after-market trading as Wall Street analysts were buoyed by Disney’s promise to raise prices and crack down on password sharing.
Here’s a look at some of our other headlines from yesterday:
Housebuilder Bellway hit by 40% slump in reservations as interest rates soar and Help to Buy ends
Paddy Power owner Flutter returns to profit and targets US listing by year end
China in deflation for first time in 2 years as prices fall 0.3%
Coca Cola HBC profits double to almost €386 million as sales of coffee and energy drinks help it shift 1.4 billion cases
City giant ICAP cuts number of brokers
Amazon “in talks” to take big stake in ARM IPO next month
This morning we’re expecting results from food delivery app Deliveroo, betting business Entain, mining firm Antofagasta and investment service Hargreaves Landsdown.
In the afternoon we’ll get US inflation and unemployment numbers.
