Yahoo Finance FTSE 100 Live: ‘Unease is spreading across the banking sector again’; FTSE closes at 7,891.13
Premier Inn owner Whitbread and Primark business Associated British Foods are in today’s spotlight as the earnings season picks up pace.
The focus is also on Wall Street, where investors are awaiting tonight’s release of figures from mega-caps Google owner Alphabet and Microsoft. In the meantime, the FTSE 100 is struggling for direction.
In the UK, public sector borrowing of £21.5 billion in the final month of the financial year represented the second-highest figure for March since records began in 1993.
FTSE 100 Live Tuesday
Borrowing figures boost tax cut hopes
Ocado to shut Hatfield facility
Primark price hikes ‘nearly through’, says CEO
Why is inflation in the UK higher than other rich countries?
Tuesday 25 April 2023 17:41 , Daniel O'Boyle
As Chancellor almost a year ago, Rishi Sunak stressed the global nature of inflation to underline how it would take time to bring prices back under control.
But today, the UK seems to stand further and further adrift from its economic peers. In the G20 table of inflation, the UK sits in the relegation zone, ahead of only Turkey and Argentina.
The UK’s 10.1% CPI figure in March compares with 6.9% in the eurozone and 5.0% in the US. All major economies were forced to drastically increase the money supply to provide support during the pandemic.And all were affected by the war in Ukraine. So what makes the UK different?
Heathrow bosses call for conciliation talks over union strike threat
Tuesday 25 April 2023 17:24 , Daniel O'Boyle
Heathrow airport is calling for talks at the conciliation service in a bid to avert a planned series of strikes next month.
About 1,400 security guards in the Unite union are set to stage eight strikes in a dispute over pay, including during the coronation of King Charles, following walkouts over Easter.
Someone will have to get poorer to end runaway inflation, says Bank economist
Tuesday 25 April 2023 17:04 , Daniel O'Boyle
Someone in the UK must accept that they are poorer otherwise inflation will stay persistent, the chief economist of the Bank of England has said.
Huw Pill said that people and businesses have responded to higher bills and costs by asking for higher wages or charging their customers more money.
But this, he said, adds to inflation, pushing up prices even further across the economy.
FTSE closes at 7,891.13
Tuesday 25 April 2023 16:41 , Daniel O'Boyle
The FTSE 100 closed at 7,891.13 today, down 0.3%, with miners leading the decline.
The blue-chip index fell as low as 7866, and although it recovered almost all of its losses by the mid-afternoon, it fell again when US markets opened.
Most of the biggewst fallers were mining businesses, ahead of Glencore and Fresnillo reporting results tomorrow. The biggest gainer was Premier Inn owner Whitbread.
Bank of England deputy governor: Pandemic support isn’t to blame for inflation
Tuesday 25 April 2023 16:08 , Daniel O'Boyle
The Bank of England’s deputy governor for monetary policy says energy and supply-chain shocks, not the rise in household balances driven by pandemic-era support, have been the main cause of the inflation that has been plaguing the UK.
Speaking at the National Institute of Economic and Social Research, Ben Broadbent examined whether the current inflation crisis is a result of the 2020 growth in the “broad money supply”, which is predominantly made up of funds held in commercial banks, plus cash in circulation.
That growth was mostly related to measures taken to provide support during lockdowns.
Banking ‘problem is not yet at an end'
Tuesday 25 April 2023 15:18 , Daniel O'Boyle
Shares in US companies have fallen today, as analysts warn that the banking sector’s problems are not yet over.
The S&P 500 is down 0.7% to 4106, while the Dow Jones is down 0.3% to 33783 and the Nasdaq Composite has fallen by 0.8% to 11936.
First Republic Bank leads the falled with shares down 27.4% to $11.62, which would be the regional lender’s lowest ever close if the price remains at that level.
‘’Unease is spreading across the banking sector again, sparked by the sinking realisation of the scale of deposit flight suffered this year and the worry that the problem is not yet at an end,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said. “Shares in First Republic Bank plunged at the open on Wall Street after the extent of the run on the bank became clear, with customers pulling more than $100 billion from their accounts in the first quarter.
“Sentiment is downbeat across the sector, particularly as First Republic’s bleak situation has been painted so soon after Credit Suisse revealed just how large its black hole was yawning before its collapse and warned the trend of outflows had not yet reversed.”
US stocks set to fall as banking worries haven’t disappeared
Tuesday 25 April 2023 14:17 , Daniel O'Boyle
Wall Street shares are set to open lower today, amid renewed fears over regional banks.
According to futures markets, the Dow Jones is set to open down 0.2% to 33925, while the S&P 500 is projected to lose 0.5% to 4140 and the Nasdaq index to fall at a similar rate to 12998.
First Republic is among the biggest fallers, due to concerns about the outflows it revealed in its results after markets closed last night.
Some of the country’s biggest businesses - including Google owner Alphabet and Microsoft - will report results after markets close today..
Planet Organic founders rescue chain from administration, but jobs will be lost
Tuesday 25 April 2023 14:11 , Daniel O'Boyle
The founders of Planet Organic have bought the chain back from administrators, ensuring the organic supermarket chain stays alive, but four stores will be closed with their 64 staff to be laid off.
Administrators Interpath sold the chain to Bioren Limited, a business incorporated last month with Planet Organic founders Renée and Brian Elliott as its shareholders.
Tax credits renewal packs to be sent out from early May
Tuesday 25 April 2023 13:21 , Daniel O'Boyle
Around 1.5 million tax credits renewal packs for the 2023-24 tax year will be issued to people from early next month, HM Revenue & Customs (HMRC) has said.
The annual renewal packs will be sent out between May 2 and June 15.
Tax credits help families with targeted financial support.
First Republic shares collapse premarket
Tuesday 25 April 2023 12:45 , Daniel O'Boyle
Shares in US regional bank First Republic are set to tumble by more than 20% and hit levels close to the lows it reached before a group of top banks bailed the lender out, after it reported its results last night.
Shares closed at $16.00 yesterday, but they are set to fall to $12.45 when trading starts again, according to futures markets.
“First Republic Bank’s latest results have restarted the market’s worry engine, triggering a sell-off across Europe. Its shares fell 22% in after-hours trading after revealing a sharp decline in deposits, prompting speculation it could be the next bank to be taken over,” says Russ Mould, investment director at AJ Bell.
“There are already concerns that banks in many parts of the world will choose to be more selective over whom they lend to, which in turn could have negative implications for the economy.
“Investors certainly lost their appetite for banking stocks, with NatWest falling 2.2%, Lloyds down 1.8% and Barclays slipping 1.2%. Together with weakness in economically sensitive mining and packaging sectors, the FTSE 100 fell 0.5% to 7,875.
NatWest blames SVB and Credit Suisse collapse on ‘poor risk management’
Tuesday 25 April 2023 12:41
NatWest Group has said “poor risk management” and “long-standing” challenges were to blame for the failures of Silicon Valley Bank (SVB) and Credit Suisse which sparked concerns over the strength of the global banking industry.
The British bank is strong and resilient in contrast, chairman Howard Davies told shareholders at its annual general meeting (AGM) in Edinburgh.
Profits tumble at Duke of Westminster’s Grosvenor, but 64% of London office pipeline is pre-let
Tuesday 25 April 2023 12:08 , Joanna Hodgson
The London office pipeline at the Duke of Westminster’s property company Grosvenor is nearly two thirds pre-let, but its chief executive has warned of “trouble coming” for some landlords of older workspace alongside revealing a slump in profits.
Boss Mark Preston’s comments came as Grosvenor, which has a £9 billion property empire across 12 countries and owns large chunks of Mayfair and Belgravia, showed it was not immune from economic headwinds in 2022, including rising interest rates and real estate value falls resulting in a lower total return.
Government owes £90,000 for every household as borrowing soars
Tuesday 25 April 2023 11:41
The Government now owes a record £90,000 for every household in the UK after borrowing soared again in March to lift total public debt to more than £2.5 trillion.
Latest official data shows that Chancellor Jeremy Hunt was forced to borrow another £21.5 billion in the month — the second highest total on record for March — just to keep the wheels of Government turning.
Government spending rose by almost a fifth in the month as ministers handed out billions in support for families suffering with sky-high energy bills following the Russian invasion of Ukraine.
Alison Ring, director of public sector and taxation at the accounting industry body ICAEW, said: “Today’s data for the financial year to March 2023 emphasises just how weak a state the public finances are in, with debt now approaching an eye-watering £90,000 per household.”
Premier Inn expects coronation boost as hotels sell out in 15 minutes
Tuesday 25 April 2023 11:05 , Daniel O'Boyle
Premier Inn owner Whitbread will see a boost from the Coronation after its Westminster hotels sold out within 15 minutes of the announcement of the date of the event.
The hotelier’s profits rocketed to above pre-pandemic levels as it said it was also benefiting from “the structural decline in the independent hotel sector” as travellers opt for branded chains rather than family-run locations.
£5bn Fleet Street plan will transform old Express HQ
Tuesday 25 April 2023 10:41 , Daniel O'Boyle
The former Daily Telegraph and Daily Express headquarters are among buildings being refurbished or newly built in a £5 billion makeover of the former newspaper district Fleet Street.
A pipeline of 34 schemes will breathe new life into the area, creating about three million sq ft of new commercial space and attracting 25,000 additional workers, says a new report from business group Fleet Street Quarter.
Developments include a “Justice Quarter” with 18 court rooms, focused on cyber-crime and fraud, delivered by the City of London Corporation at Salisbury Square.
After the newspapers moved in the Eighties and Nineties they were replaced by financial and professional services companies.
Now a new wave of creative and tech firms are taking space such as creative studio Framestore. Lady French, chief executive of the Fleet Street Quarter Business Improvement District, said: “We are seeing the evolution of an area; an emerging, sustainable, inclusive hub for today and tomorrow.”
Banking stocks under pressure, McBride jumps 8%
Tuesday 25 April 2023 10:21 , Graeme Evans
Fresh selling hit Lloyds and NatWest shares today after their rival Santander warned this year could see a 10% slide in UK house prices back to 2021 levels.
The high street lender also reported the most competitive ISA season for several years alongside a further slowdown in the mortgage market as interest rates rise.
An improved net interest margin of 2.21% helped to push Santander UK’s first quarter profits up to £547 million, but the tone of its outlook statement did little for the mood of investors ahead of NatWest’s results on Friday and Lloyds on 3 May.
Santander expects a stubborn inflation rate to put further strain on real disposable income and potentially lead to Bank of England interest rates peaking at 6%.
UK chief executive Mike Regnier said: “The economic outlook for 2023 remains uncertain with inflation predicted to remain above the 2% target meaning many households and businesses will continue to face difficult decisions in the months ahead.”
However, he reassured that UK banks are well-positioned to navigate such challenging conditions.
Unlike the wider stock market, shares in UK lenders are significantly lower than where they were before turmoil caused by the demise of Credit Suisse and Silicon Valley banks.
Both NatWest and Lloyds fell 2% today, losing 6.3p to 267.9p and 1p to 47.9p respectively in a session when the FTSE 100 index declined 26.12 points to 7886.08.
Other UK assets under pressure included British Gas owner Centrica, which dropped 3.5p to 110.35p, and property giant British Land following a fall of 6.6p to 382.2p.
The FTSE 250 index dipped 62.21 points to 19,164.73, with builders’ merchant Travis Perkins down 17p to 942p after it said total sales fell 2.8% in the first three months of the year amid weaker new build housing and domestic repair markets.
Household cleaning products manufacturer McBride provided one of the strongest performances of the session after it upgraded results guidance for the year to June.
New business wins and favourable demand as consumers trade down to its private label products mean operating profits should be as much as £10 million higher than City forecasts. Shares jumped 8% or 2.25p to 30.8p.
London Underground staff to be re-balloted on strike action amid ongoing pay dispute
Tuesday 25 April 2023 09:47 , Daniel O'Boyle
More than 10,000 London Underground workers will be re-balloted for strike action in a long-running dispute over jobs and pensions, the RMT announced on Tuesday.
The tube union has been locked in a row with Transport for London and the Mayor for nearly a year, resulting in misery for commuters.
The RMT has now threatened more industrial action over plans to cut 600 jobs stations, with more roles across train operations and maintenance to follow.
Jeremy Hunt rakes in £40 billion more in income tax and NI as stealth taxes hit millions of workers
Tuesday 25 April 2023 09:46
The Chancellor raked in £40 billion more in income tax and national insurance as stealth taxes hit millions of workers, experts warned on Tuesday.
Financial firm Hargreaves Lansdown said receipts from PAYE Income Tax and NIC1 (National Insurance) for April 2022 to March 2023 hit £378.2 billion.
It stressed that this was £40.2 billion higher than in the same period a year earlier.
Primark price rises ‘nearly through’, says CEO
Tuesday 25 April 2023 09:39 , Michael Hunter
Primark is “nearly through” a period of price rises which have knocked profits at the budget fashion chain, the CEO of its parent company told The Standard, breathing new life into hopes that inflation is easing on the high street.
George Weston said: “I would be optimistic that we don’t have to move our own prices up … I wouldn’t say we are 100% done, but we are nearly through it. And we’ve not seeing further cost pressure on ourselves, so I think we’re in a much happier place.”
Grocery price inflation dips but ‘too soon to call the peak’
Tuesday 25 April 2023 09:36 , Daniel O'Boyle
Grocery price inflation dipped slightly in April – but consumers are still paying 17.3% more than this time last year, figures show.
Kantar warned that the fall from last month’s 17.5% only meant that prices were not increasing as quickly after 10 months of double-digit growth.
As consumers continued to find ways to manage their household budgets, own label sales were up 13.5% year on year, with the very cheapest value lines soaring by 46%.
Central Banks put crisis behind them with normal US dollar operations restored
Tuesday 25 April 2023 09:10 , Daniel O'Boyle
Central banks including the Bank of England have ended the steps taken last month to increase US dollar liquidity, in a sign they see the recent crisis as well and truly in the rearview mirror.
The Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank in consultation with the US federal reserve, all agreed last month to change their US dollar-buying operations from weekly to daily, in order to ease market fears.
With those fears seemingly now passed, the banks have reverted back to weekly dollar operations.
Public borrowing figures could pave way for tax cuts
Tuesday 25 April 2023 08:34 , Daniel O'Boyle
The UK’s latest public borrowing figures could create room for tax cuts or spending increases in the Autumn, according to Ruth Gregory, deputy chief UK economist at Capital Economics.
“The news that total borrowing in 2022/23 was £13.2bn lower than the Office for Budget Responsibility predicted only a month ago provides the Chancellor with more wiggle room to cut taxes/raise spending ahead of the next general election, which is due to take place by January 2025,” she said.
“With the next election fast approaching we wouldn’t be at all surprised to see a further fiscal loosening in the Autumn Statement, on top of the £21.9bn (0.8% of GDP) giveaway in 2023/24 announced in the spring.”
However, she added that any loosening would be only short-term, as there would be pressure for tighter policy going forward.
That said, with both parties likely to stick to current plans to bring down public debt as a share of GDP, a sizeable fiscal tightening will still be required after the election, whoever is in charge.”
AB Foods shares fall 4%, FTSE 100 lower
Tuesday 25 April 2023 08:16 , Graeme Evans
The FTSE 100 index is 30.08 points lower at 7882.12 during a session of contrasting results-day fortunes for Whitbread and Associated British Foods.
Shares in Premier Inn owner Whitbread rose 4% or 123p to 3248p after its full-year figures, whereas Associated British Foods lost 4% or 78.5p to 1991.5p.
The downbeat reaction to half-year results from Primark-to-Ovaltine business AB Foods is offset by a 27% rise for shares over the past year.
Richard Hunter, head of markets at Interactive Investor, said: “AB Foods is steering a steady course through the persistent inflationary storms, with Primark remaining a key driver in the group’s recovering fortunes.”
The FTSE 250 index fell 68.11 points to 19,158.83, with pressure on ASOS shares continuing after analysts at Liberum reiterated their “sell” rating. The stock, which has been the target of short sellers, dropped 9.2p to 740p.
Over 2,000 jobs on the line as Ocado to shut Hatfield facility
Tuesday 25 April 2023 08:12 , Simon Hunt
Ocado is set to shut one of its biggest fulfilment centres, putting at risk the jobs of some 2,300 staff who work there.
The online retailer said its Hatfield site was the oldest in the network and is responsible for handing around 20% of its weekly orders.
Ocado said it had begun a consultation with staff and hoped to redeploy “as many as possible” to other sites, including its proposed hub in Luton.
CEO Tim Steiner said: “As the online grocery channel grows, our new, enhanced fulfilment centres and technologies will drive a step change in customer experience and efficiency.
“With this capacity coming online, now is the right time for us to halt operations at our oldest facility at Hatfield
“We have many brilliant Hatfield-based colleagues who have been with us for a long time and are a big part of our journey. We want to keep as much of this talent and experience within the business as possible and expect to retain a large proportion of colleagues impacted.”
Travis Perkins bemoans weak housebuilding market as sales slide
Tuesday 25 April 2023 07:42 , Simon Hunt
Travis Perkins warned of weakness in the new build housing market as it posted a drop in revenues.
The builders’ merchant said total sales fell 2.8% in the first three months of 2023, while merchanting sales fell 4.7%.
Travis Perkins said: “As expected, trading volumes in the Merchanting business were impacted by weakness in the new build housing and domestic repair, maintenance and improvement markets.”
CEO Nick Roberts said: “The timely actions taken to prepare our businesses for a lower demand environment mean that we continue to expect to deliver a full year performance in line with market expectations.”
Primark owner ABF eyes southern US for fashion chain expansion as inflation eats into sugar business
Tuesday 25 April 2023 07:36 , Michael Hunter
Associated British Foods, the owner of Primark, said it was expanding the budget fashion chain into the southern states of the US today, as it reported a dip in half-year adjusted group operating profit.
The measure slipped 3% at constant exchange rates to £684 million, from group revenue of £9.6 billion, up 17%. The company, which is also a major sugar producer, said inflation was “intense and volatile” in the period and that it takes longer to recover the effects of higher input prices through its food business.
At Primark, a weaker pound in the period eroded margins in the UK and operating profit fell, but the impact was offset by the chain’s international earrings from US and Ireland, where revenue converted into sterling gets an uplift from such patterns in exchange rates. Sales at the chain rose almost a fifth to £4.2 billion, while operating profit fell to £351 million from £414 million in the same period a year ago.
George Weston, chiefexecutive, said: “Primark has been very successful in this period in attracting new customers with its proposition of good quality merchandise combined with price leadership and well invested stores. We have had a very strong contribution from new stores opened in the period, and today we are announcing plans for the development of our Primark business in southern states of the US.”
ABF It stood by ts guidance for the full-year.
Premier Inn owner profits grow as independent hotels decline
Tuesday 25 April 2023 07:35 , Daniel O'Boyle
Premier Inn owner Whitbread’s profits increased above pre-pandemic levels, as it said “the structural decline in the independent hotel sector” helped its budget hotels gain market share.
Profit was £888 million on revenue of £2.6 billion, with £2.5 billion of that revenue coming from the Premier Inn UK division.
“These are a fantastic set of results,” CEO Dominic Paul said. “Whilst the recovery in market demand in conjunction with a structural decline in the independent sector has provided a helpful backdrop, it is the combination of our own initiatives and our clearly differentiated business model that has sustained our brand strength and delivered such an impressive operational and financial performance.”
FTSE 100 seen lower, focus on US earnings
Tuesday 25 April 2023 07:27 , Graeme Evans
London shares continue to lack direction after Wall Street’s major indices finished broadly unchanged yesterday.
The S&P 500 index and Dow Jones Industrial Average were flat, while the tech-focused Nasdaq lost 0.3% due to uncertainty ahead of tonight’s release of figures from mega-caps Google owner Alphabet and Microsoft.
Their shares have risen 20% and 17% respectively so far this year, with any earnings disappointment set to prompt investors to reassess expectations for the rest of the year.
Facebook owner Meta Platforms is due to report tomorrow evening and Amazon on Thursday.
The updates come against heightened worries over the economic impact of tighter monetary policy and whether the Federal Reserve will announce another interest rate hike at its May meeting.
In the UK, CMC Markets expects the FTSE 100 index to open 22 points lower at 7890.
The top flight finished just two points lower yesterday after a late recovery in the Brent crude price benefited oil stocks BP and Shell.
Red signal for Hornby as train maker swings to loss
Tuesday 25 April 2023 07:19 , Simon Hunt
Hornby’s hopes for profitability were derailed today when the model train maker said it expected to swing to a loss for the year. That compares to the £1.4 million profit after taxation the firm made last year.
Hornby said: “We expect to report a modest underlying loss before tax this year on account of increased overheads (in an inflationary environment) and as a result of lower than anticipated sales versus budgets.”
The company said it was encouraged by stronger trading in the first months of 2023, but that they did not go far enough to recover the shortfall in sales at the tail end of 2022.
Public sector borrowing second-highest for March in history
Tuesday 25 April 2023 07:06 , Daniel O'Boyle
Net public sector borrowing last month was the second-highest for March since records began in 1993, at £21.5 billion.
The figure brings annual public sector borrowing to £139.2 billion, which is 5.5% of GDP. That figure was £13.2 billion below the Office of Budget Responsibility’s (OBR) forecasts for the year.
During the month, the Government received £81.0 billion in taxes and other income, up 2% year-on-year, while it spent £104.7 billion, up 16.8%. Much of the increase was due to energy bill support.
Recap: yesterday’s top stories
Tuesday 25 April 2023 06:51 , Simon Hunt
Good morning. Here’s a summary of our top stories from yesterday:
There were more than £50 billion in capital outflows at Credit Suisse in the first three months of 2023, revealing the scale of panic as account holders rushed to withdraw funds.
Rishi Sunak has sought to fill the void left by the demise of the CBI after saying he was “unashamedly pro-business” at an event with industry leaders in London he has called ‘Business Connect’.
Italian Pizza chain Prezzo is to shut down 46 restaurants in a restructuring plan that is set to put over 800 workers at risk of redundancy.
The London founders of Getty Images could pocket as much as $2 billion from the sale of the company after it was subject to a fresh takeover offer.
Today we’re expecting:
Public Sector Net Borrowing figures
Whitbread results
ABF results
Travis Perkins trading update
Jupiter Fund Management trading update
