Yahoo Finance FTSE 100 Live: ‘Recession could be back on the table’; shares close up 0.3% on US inflation good news
Supermarket giant Tesco today revealed an operating profit of £2.6 billion for the year to 25 February, down 6.9% on a year earlier. Sales were 5.3% higher at £57.6 billion. Chief executive Ken Murphy said: "It's been an incredibly tough year for many of our customers, and we have been determined to do everything we can to help.”
Shareholders will receive a dividend of 7.05p a share worth £516 million in June, with the company also announcing plans for a buyback of its shares worth £750 million.
Meanwhile, the latest GDP figures showed the UK economy failed to grow in February, with weaker levels of activity in services and production offset by growth in construction.
FTSE 100 Live Thursday
Tesco profits fall amid cost of living crisis
GDP stagnates in Febraury
Housebuilding shares lifted by upgrade
FTSE closes up 0.3% after US inflation good news
Thursday 13 April 2023 16:39 , Daniel O'Boyle
The FTSE 100 closed up 0.3% to 7846, rising in the affternoon after a surprisingly sharp decline in US producer price inflation.
The index was steady for most of the day, staying within 10 points of opening for the entire afternoon despite disappointing GDP figures.
However, after the US Bureau for Labor Statistics published its Producer Price Index figures, revenue the FTSE rose as it continued to get back towards 8000.
The biggest riser of the day was miner Antofagasta, while the biggest faller was housebuilder Persimmon, which broke the trend in an otherwise positive day for the construction sector.
World’s richest man Bernard Arnault gets €10 billion richer
Thursday 13 April 2023 16:13 , Daniel O'Boyle
The world’s richest man, Bernard Arnault, has added another €10 billion to his fortune as shares in LVMH jumped after it reported stronger-than-expected Q1 sales.
Revenue was up by 17% as the luxury goods business, which owns fashion houses Louis Vuitton and Marc Jacobs, as well as alcohol brands Moet and Hennessy and beauty shop Sephora.
LVMH shares are up by 5% today, with the results being published after markets closed yesterday.
Arnault owns almost half of LVMH through a combination of shares owned directly and via other businesses.
No swift US-UK free trade deal, says Jeremy Hunt
Thursday 13 April 2023 16:05
Chancellor Jeremy Hunt said on Thursday that a US-UK free trade deal much-trumpeted by Brexiteers would not be agreed “imminently” - dampening the likelihood that it could happen before the next General Election.
He made the admission after US president Joe Biden met Rishi Sunak in Belfast on Wednesday. Theyare not believed to have discussed such a trade pact.
Opening up the prospect of striking a quick US-UK free trade deal was one of the arguments made by Brexiteers ahead of the 2016 referendum.
US producer price inflation tumbles
Thursday 13 April 2023 15:36 , Daniel O'Boyle
The US producer price index fell by 0.5 per cent month on month, while prices were up by just 2.7 per cent year-on-year, in what coould be a key sign that the country is bringing prices back under control.
Alex Kuptsikevich, FxPro senior market analyst, said the drop had shocked experts, and added that it may make the Federal Reserve more likely to pause its interest rate hikes,
“A real shock followed yesterday's mild disappointment in CPI in producer prices,” he said. “They fell by 0.5% in March, and the annual growth rate fell from 4.9% to 2.7%, the lowest since Jan 2021, but more importantly, it is close to the last 20 years’ average.
“For now, the market is celebrating the sharp divergence between expectations and facts by buying more risky assets and selling the dollar. Interest rate futures are pricing in a 40% chance that the Fed will leave rates at current levels in early May. This is still not a critical reversal, as a week and a month ago, these odds were over 50% (and on 13 March, there was an 18% chance of a cut).
“This problem is receding into the background, and the Fed's focus can now turn to wages and prices in the service sector. So far, the only solution to this problem is a drastic economic growth slowdown. This is probably related to the Fed's expected moderate recession this year. This could signal that the central bank will put the brakes on monetary policy, contrary to market expectations.”
Tech sector leads US share gains
Thursday 13 April 2023 15:04 , Daniel O'Boyle
Shares in US companies rose after markets opened in New York, with Netflix among the top gainers.
The S&P 500 is up 0.2% to 4102 and the Dow Jones ticked up by 20 points to 33666. The Nasdaq index rose by 0.9%, to 12038. Among the big gainers on the Nasdaq was Netflix, which is up 3% to $340.64.
London is UK’s worst city for nepotism with half of workers handed jobs via connections
Thursday 13 April 2023 14:45 , Daniel O'Boyle
London has the highest rate of ‘Nepo workers‘ in the UK, as half of Londoners have been handed a job because of personal connections.
A poll of 2,000 working-age adults conducted by recruitment software firm Applied found the capital beat out Liverpool, Belfast and Plymouth to be the UK’s top city for nepotism, with exactly 50% saying connections gave them a job.
Of those workers, one in eight said they had entered a senior management position because of personal links, while 38% entered middle management.
US shares set to gain despite recession fears
Thursday 13 April 2023 14:09 , Daniel O'Boyle
Shares in US companies are set to rise today, after falling yesterday afternoon amid renewed fears of a recession.
According to futures markets, the S&P 500 is set to gain 0.4% to 4135, while the Dow Jones is expected to rise by 0.2% to 33890 and the Nasdaq to rise by 0.6% to 13031.
US shares started yesterday strongly, but minutes from the Federal Reserve's March policy meeting worries investors late in the day, leaving the major indices flat.
Glencore’s improved mega-merger offer rejected by Teck
Thursday 13 April 2023 13:53 , Daniel O'Boyle
Glencore’s improved $22 billion proposal to acquire fellow mining business Teck Resources has been rejected by the Teck board.
Teck had rejected an earlier all-share offer, which included plans to then spin off the coal operations of the combined business.
Glencore came back with a new bid including a cash option for the coal operations, allowing Teck shareholders the option of a “full coal exit”.
However, Teck’s board said the new deal stil does not increase the value to its shareholders.
“Glencore has made two opportunistic and unrealistic proposals that would transfer significant value to Glencore at the expense of Teck shareholders,” said Teck chair Sheila Murray. “Teck’s proposed separation creates a significantly greater spectrum of opportunities to maximize value for Teck shareholders.
“The special committee and board continue to recommend that shareholders vote for the proposed separation into Teck Metals and EVR as the best pathway to fully realize the greatest value.”
HSBC could leave iconic Canary Wharf tower for Fleet Street
Thursday 13 April 2023 13:37 , Daniel O'Boyle
HSBC is considering abandoning its Canary Wharf tower in favour of a move to the former offices of Goldman Sachs on Fleet Street, according to reports.
Bloomberg reports that the global banking giant is looking at “a handful” of new office spaces in London that would be available when the lease expires at its 200-metre-tall skyscraper at 8 Canada Square in 2027.
However, the bank may also choose to refurbish its current home and stay there.
John Lewis looks to ‘tween’ market as it expands children’s fashion business
Thursday 13 April 2023 13:07 , Daniel O'Boyle
John Lewis has announced an expansion of its children’s fashion business as it looks for an increasing cut of the lucrative “tween” market.
The department store is launching its first own-label tween collection for seven to 12-year-olds as part of an expansion of more than 2,100 lines alongside 10 new brands.
The children’s clothing market will be worth £7.3 billion by 2027, up from last year’s £6.8 billion, according to Mintel.
Hopes of economic rebound are hobbled by wave of strike walkouts
Thursday 13 April 2023 12:25 , Jonathan Prynn
The spectre of recession returned today after official figures revealed the British economy failed to grow at all in February.
The zero growth in GDP during the month was below forecasts of a 0.1 per cent expansion and means the UK remains stuck in a stagflation rut with inflation still running in double digits. The latest data from the Office for National Statistics showed that once again the wave of strikes over the winter hobbled economic growth with walkouts by teachers and civil servant contributing to the disappointing GDP figure for February.
Thursday 13 April 2023 11:51 , Simon Hunt
Rishi Sunak’s wife Akshata Murty is set to pocket another £6.7 million in dividends from her billion-dollar family tech company as she cements her position as the wealthiest-ever resident of Downing Street.
Murty, who has a share in Bangalore-based Infosys worth just over half a billion pounds, is set to receive the cash after the firm today announced a 19 rupee (18p) dividend to shareholders following a year of rapid growth.
She has received over £40 million in dividends since the start of 2020, according to an Evening Standard analysis, making her one of the highest earners in the country.
Akshata’s father Narayana Murty founded Infosys, which provides IT outsourcing services, in 1981. It has since grown to have a market cap of £58 billion, giving him a wealth of $4.4 billion (£3.9 billion) according to Forbes.
Pound at highest level in almost a year
Thursday 13 April 2023 10:53 , Daniel O'Boyle
The pound hit its highest level in almost a year, rising back above $1.25 after the latest US inflation data led to a weakening of the dollar.
Sterling exceeded the levels it reached earlier this month, and is ucrrently at $1.2515.
The latest rise has been mostly driven by a fall in demand for US currency, though, as the dollar’s price against a benchmark of six peers hit its lowest point in two months.
Mortgage defaults up in Q1
Thursday 13 April 2023 10:46 , Daniel O'Boyle
Default rates on both mortgages and other loans rose in the first quarter of the year and are expected to continue to grow, the Bank of England has revealed.
The statistics also show that mortgage availability is expected to fall in Q2.
“It’s little surprise that lenders were tightening up, given that default rates for unsecured lending had already increased during the first few months of the year and were expected to lift again towards the summer,” Susannah Streeter, head of money and markets at Hargreaves Lansdown said. “Lenders were already expecting that there will be less secured credit available for home loans during the Spring months.”
McDonald’s franchise owner eyes up luxury hotel sites in London
Thursday 13 April 2023 10:36 , Jonathan Prynn
Wealthy US polo playing socialite and businessman Bruce Colley, whose family has been one of the largest owners of McDonald’s franchises in the United States, is considering opening luxury hotels and restaurants in London.
The 69 year old has partnered with New Zealand financier Rayo Withanage to raise an initial $200 million with plans for further fundraising to finance their investments in the capital and elsewhere around the world over the next two years.
It is thought they have already identified two sites in London ripe for development.
Housebuilding note triggers buying, FTSE 100 flat
Thursday 13 April 2023 10:20 , Graeme Evans
Housebuilding stocks today rallied on hopes that the property downturn won’t be as bad as current valuations suggest.
HSBC analysts triggered the buying with a note upgrading recommendations on six leading stocks to “buy” and raising target prices by an average 29%.
The bank said there was now greater visibility on the extent of the downturn, believing the impact for profits and cash flows is now more than factored into share prices.
In September, HSBC downgraded all UK housebuilders under its coverage to "hold" after predicting a 20% slump in demand over the following year.
Stocks are down by almost 50% on their pre-pandemic highs but today’s optimism helped Barratt Developments and Taylor Wimpey to top the FTSE 100 risers board.
Their shares rallied 2% or 10.3p to 477.4p and 2.55p to 120.6p after both were placed in HSBC’s “buy” camp with price targets of 570p and 150p respectively.
Other top flight beneficiaries included property portal Rightmove, which lifted 10.8p to 568p, and Berkeley Group with a gain of 71p to 4269p. Persimmon, which was also upgraded, fell 19.5p to 1257p after shares began trading without the right to the latest dividend award.
Lloyds Banking Group lost 1.7p to 48.2p for the same dividend reason as the FTSE 100 index drifted 4.77 points to 7820.07. Other top flight fallers came from the commodities sector, reflecting concern over the US Federal Reserve’s “mild recession” warning and signs that US rates may have to rise again next month.
The FTSE 250 index edged up 21.69 points to 19,024.42, with Redrow 4% or 16.8p higher to 494.4p as HSBC gave it the biggest upside in its coverage with a new target of 670p. The shares of Bellway and Crest Nicholson were also 3% higher after being upgraded.
On AIM, Churchill China shares rose 4% or 48p to 1288p as the ceramics maker reported a 52% rise in annual profits to £9.1 million. It hiked its dividend by more than a fifth to 21p a share and said the new year had started well after hitting first quarter targets.
Bank of England fines TSB’s ex-data chief for role in 2018 IT disaster
Thursday 13 April 2023 10:14 , Daniel O'Boyle
The Bank of England’s Prudential Regulatory Authority fined TSB’s former chief information officer £81,620 today for his role in a 2018 IT ‘meltdown’.
The bank had aimed to move customers to a new IT system in 2018 after its split from Lloyds, but millions of customers ended up locked out of their accounts because of the switch.
TSB itself was fined £48 million last year because of the incident.
“Senior managers have an essential role to play in ensuring that firms manage and supervise outsourcing effectively,” PRA chief Sam Woods said. “In this case, the PRA has fined Mr Abarca because his management of a key outsourcing relationship fell below the standard we expect.”
PZ Cussons cleans up in Q3
Thursday 13 April 2023 10:03 , Daniel O'Boyle
Revenue at soap maker PZ Cussons was up 6% to £166 million in the three months to 4 March, as the business returned to growth in Europe and the Americas.
“We have delivered another quarter of mid-single digit revenue growth, in line with our longer-term ambition,” CEO Jonathan Myers said. “This represents a sixth consecutive quarter of growth, with the business underpinned by the strength and depth of our portfolio and our ongoing strategy to invest behind our brands, build internal capabilities and serve consumers better.
“As anticipated, performance has strengthened in Europe & the Americas, with a return to revenue growth and a marked improvement in profitability in the quarter.
“ As a result, we remain confident in delivering against FY23 expectations and that further strategic progress will be made in the balance of FY23 and into FY24.”
PZ Cussons shares are up 4.3% this morning to 195.2p.
UK trade deficit narrows
Thursday 13 April 2023 09:46 , Daniel O'Boyle
The UK’s trade deficit narrowed to £61.3 billion in February.
The difference between the vallue of important and exports closed due to decreases in imports from both the EU and the rest of the world.
Jack Sirett, partner at global financial services firm Ebury, said the deficit may close further as energy prices fall and the pound strengthens.
“Energy prices have driven huge changes in trading patterns over the past year with many European governments importing vast volumes of fuels to ensure they were able to maintain supply through the Winter,” he said. “With inventories well-stocked following a welcome mild Winter and energy prices falling, these wild swings to more typical trading patterns look likely to calm.
“For the UK, two factors through the start of 2023 are providing an economic boost and helping to narrow its trade in goods deficit which has widened sharply since the outbreak of the pandemic. Firstly, falling energy prices will lower the cost of imports both directly for UK gas storage and through its role as a conduit for LNG for continental Europe.
“The strengthening pound – which has been the best performing G10 currency so far this year – will also lower the cost of imports and further close the trade in goods deficit.
LSL swings to loss as it writes down £87 million amid weaker mortgage demand
Thursday 13 April 2023 08:39 , Daniel O'Boyle
Reeds Rains owner LSL swung to a loss in 2022 after writing down the value of its business due to weaker homebuying demand going forward.
The UK’s second-biggest estate agent chain wrote down £87 million worth of value, saying that market conditions will lead to a “deterioration” in its cash flow. Mortgage rates skyrocketed after September’s mini-Budget, and though they have come down since, the Bank of England’s rate hikes will prevent a full rebound in demand.
As a result, it made a £57 million loss,after bringing in £73 million in profit last year. Without the writedowns, the company would have made a profit of £30 million.
CEO David Stewart said the company did well considering the challenging environment.
“I am pleased to report that LSL is in good shape,” he said. “In 2022, the Group traded well in challenging market conditions, whilst making substantial progress in the execution of our strategy to grow and to become a B2B financial services provider.
“As a result, we remain well-placed to deliver on our strategy and capitalise on the significant opportunities we see available.”
Tesco shares rise in flat FTSE 100 session, Darktrace up 2%
Thursday 13 April 2023 08:17 , Graeme Evans
Tesco shares are 2% higher after the supermarket giant met City expectations with an operating profit of £2.6 billion and said it was hopeful of delivering a similar figure for this year.
The FTSE 100 stock, which has been trading at an eight month high in recent sessions, rose 4.1p to 271.5p as investors also welcomed plans for a further £750 million buyback of shares.
Tesco’s improvement came during a flat session for London’s top flight, with the FTSE 100 down by 7.71 points to 7,817.13.
Imperial Brands fell 2% after its trading update, but FTSE 250-listed Darktrace rose 2% as the cyber security firm offset weaker revenue expectations by revealing improved margin guidance for around 19%.
Encouraging signs despite stagnant GDP?
Thursday 13 April 2023 08:03 , Daniel O'Boyle
GDP in February may have come in below expectations, but some experts said there were still reasons to be hopeful as construction and retail improved.
Jonathan Moyes, head of investment research at Wealth Club, noted that the stagnation was mostly due to strikes and weather rather than lower demand.
“If one were looking for positives in the data, unseasonably warm weather and industrial action were the chief drivers of lower growth, rather than a downturn in general business and consumer spending,” he said. “The consumer, the construction sector and part of the services sector such as financial services appear to be in good health.”
Similarly, Kitty Ussher, chief economist at the Institute of Directors, said there were “encouraging signs” in the data.
“While a flat economy is not usually grounds for celebration, there are some encouraging signs in today’s data,” she said. “The consumer-facing sectors – notably retail – grew in the month despite bearing the brunt of the cost-of-living crisis, and the construction sector performed strongly. In fact, were it not for the industrial action that took place in the public sector, the economy overall would have grown.
“Taken together with the upward revision to January’s data, it now seems likely that first quarter growth will come in more strongly than the Office of Budget Responsibility predicted only a few weeks ago.”
Oxford Instruments CEO to step down
Thursday 13 April 2023 08:01 , Michael Hunter
The chief executive of Oxford Instruments is retiring after seven years in the top job and 25 years at the the FTSE 250 company.
Ian Barkshire is retiring and will be succeeded by Richard Tyson, who is currently CEO of TT Electronics. No date has been set for the appointment, with the companies in talks to set one up. Berkshire will stay on until a handover can be made.
Oxford Instruments played a leading role in the development of MRI scanners now used commonly in healthcare across the world. One of the UK tech sector’s longest-established success stories, it dates back to the late 1950s and was also a pioneer as a company spun out of university research.
Richard Tyson said: “I have long been an admirer of Oxford Instruments, as one of the most exciting technology companies operating today. I look forward to building on the strong foundations created by Ian and the management team.”
Ian Barkshire called it “an honour” to “steer one of the UK’s most innovative companies, and to work with some of the most dedicated and talented people in our industry.”
Imperial Brands stands by profit guidance even as Covid demand spike for cigarettes eases
Thursday 13 April 2023 07:48 , Michael Hunter
FTSE 100 cigarette giant Imperial Brands has stood by its profit guidance for the year, pointing to “robust tobacco pricing” and stable market share.
The maker of the Gauloises and John Player Special also said sales volumes were down from a spike in demand during “Covid-related changes in buying patterns”, but that the impact was offset by “strong pricing” for its combustible products.
“We expect a stronger net revenue performance in the second half, supported by a normalisation of volume trends and price increases taken during the first half,” it added.
Imperial’s exit from Russian markets after the invasion of Ukraine pulled group revenue down year-on-year in the first half, but the company said it would be “at a similar level to last year at constant currency” excluding Russian.
It has forecast increases in sales and operating profit andsaid it was “on track to deliver ... guidance of low single-digit constant currency net revenue growth”.
Rally fades after US inflation and Fed minutes
Thursday 13 April 2023 07:36 , Graeme Evans
A boost for Wall Street after US inflation fell to 5% failed to last yesterday, with the S&P 500 finishing in the red as traders focused on the stickiness of core prices.
The decline also reflected forecasts in the Federal Reserve’s latest meeting minutes that point to a mild recession for the US economy.
Michael Hewson, chief market analyst at CMC Markets, said US inflation is heading in the right direction but that current Wall Street bets for interest rate cuts by the year-end looked to be wishful thinking.
He said: “This outcome still seems improbable given how long it has taken for US CPI to come down from its peaks last year at 9.1% in June. On the core measure, we’ve remained steady at 5.6% for all of this year, and are only 1% below the peaks seen in September last year.
“Against this sort of stodginess in core prices, it’s hard to imagine inflation falling quickly enough to justify the sort of rapid repricing which would prompt the Fed to start cutting rates only a matter of months after their last rate hike.”
Hewson expects the FTSE 100 index to open 12 points lower at 7812, having risen 0.5% during yesterday’s session.
Profits halve at Tesco
Thursday 13 April 2023 07:30 , Simon English
Cost of Living crisis hits mighty Tesco as profits half from £2bn to £1BN.
Ken Murphy, Chief Executive, warned: "It’s been an incredibly tough year for many of our customers, and we have been determined to do everything we can to help. Our results reflect our continued investment in delivering great value and quality for our customers, whilst at the same time looking after our colleagues.”
The company claims it has been shielding its customers from the worst of the inflation crisis, whle fending off competition from rivals such as Lidl and Aldi.
For 2022 sales rose 5.3% to £57.6 billon, as Tesco held its position as the most powerful grocer in Birtain.
It says it is the only grocer to gain market share over the last three years.
Murphy blamed “unprecedented levels of inflation in the prices we have paid our suppliers for their products, and the cost of running our own operations”.
He added: “We are the most competitive we have ever been, with our market-leading combination of Aldi Price Match, Clubcard Prices and Low Everyday Prices changing the way customers perceive value at Tesco.”
Darktrace expects slower growth but higher margins
Thursday 13 April 2023 07:27 , Simon Hunt
Darktrace blamed “continuing uncertainty in the macro-economic environment” as the cyber security firm reduced its full year revenue expectations to be at or around 29%, the low end of its previous 29% to 31.5% range.
However, the firm increased its full year EBITDA margin expectations to at or around 19%, above its previous 16% to 18.5% range.
CFO Cathy Graham said: “Despite macro-driven, and most likely temporary, slower growth expectations, it is a testament to our resilient business model that we can drive an increase in our profitability expectations.
“With strong margins, a significant cash position and ongoing operating cash generation, we intend to continue making smart investments in our future product pipeline.”
Chancellor optimistic despite flat GDP
Thursday 13 April 2023 07:26 , Daniel O'Boyle
Despite February’s GDP figures coming in below expectations, Chancellor Jeremy Hunt was optimistic. He pointed to the growth over the last three months, which he said showed the economy was performing better than had been expected.
“The economic outlook is looking brighter than expected - GDP grew in the three months to February and we are set to avoid recession thanks to the steps we have taken through a massive package of cost of living support for families and radical reforms to boost the jobs market and business investment.”
“These were offset by the effects of Civil Service and teachers’ strike action, which impacted the public sector, and unseasonably mild weather led to falls in the use of electricity and gas.”
GDP figures show no growth in February
Thursday 13 April 2023 07:03 , Daniel O'Boyle
There was no growth in the UK economy in February, as GDP figures came in below expectations.
GDP was unchanged from January, when the economy grew by a better-than-expected 0.3 per cent.
The performance was slightly below the expectations of economists, who had predicted growth of 0.1 per cent.
Recap: Yesterday’s top stories
Thursday 13 April 2023 06:42 , Simon Hunt
Good morning. Here’s a summary of our top stories from yesterday:
150-year-old law firm Ince Group called in administrators after encountering audit problems.
Elon Musk has said he fired as much as 80% of the Twitter workforce since buying the company last year after confessing he only agreed to the takeover because a judge would have forced him to do so.
Shares in money printer De La Rue crashed 31% after the its latest profit warning sent traders scurrying for the exit.
US inflation fell by more than expected to 5 per cent in March, but fears that it will be difficult to bring prices fully under control remain as the core CPI figure remained steady.
Today we’re expecting:
Tesco final results
UK GDP
US Producer Price Index
