- FTSE 100 ends 12 points higher at 7,484.25
- Gold makes another push towards $2,000
- US stocks indexes trading mixed
4.55pm: Not much optmism
The FTSE 100 ended Tuesday trade 0.2% firmer at 7,484, with little incentive to move higher.
“While the banking crisis seems to have subsided, stocks have been unable to find a reason to push higher this afternoon," commented IG's Chris Beauchamp. "The return of recession fears further dims the appeal of equities, and with tech stocks down sharply this afternoon it looks like there isn’t much chance of further upside for now.”
Gold's having a better day though, Beauchamp added.
"Those same recession fears, plus the weaker dollar, have provided a space for gold to rally, reversing some of its losses, he said. "The market continues to think the Fed is closer to capitulating on rate hikes than it was a month ago, providing a reason for gold to make another push at breaking $2,000.”
By the London close, US stocks were mixed. The Dow Jones Industrial Average recovered from earlier weakness and was 0.2% up at 32,488 but the S&P 500 was 0.2% down at 3,971 and the tech-heavy Nasdaq Composite was 0.6% off the pace at 11,698.
3.55pm: Fragile path
The FTSE 100 index was coddling modest gains as it approached the last half-hour of trading in London, with concerns over the banking sector still not completely put to bed, while the mood on Wall Street was more negative, with all three major indexes slipping back once more.
Craig Erlam, senior market analyst, UK & EMEA, OANDA commented: "Equity markets are edging higher again today, a sign of gradually improving confidence following a relatively drama-free weekend.
"As we saw on Friday though, anxiety remains high and things quickly spiral in those circumstances so investors are likely to remain vigilant. The dust is still settling but every passing day rebuilds confidence and allows investors to feel a little bit more relaxed."
By the London close, US stocks were mixed. The Dow Jones Industrial Average was 0.6% up at 32,421m and the S&P 500 was 0.3% higher at 3,982. But the Nasdaq Composite had turned around to trade 0.2% down at 11,799.
3.30pm: Death and taxes
Never mind Gary Lineker, new calculations by interactive investor suggests that tax per person living in the UK will hit £15,649 by 2027. That compares with just £105 back in 1953, which is equivalent to £2,260 after adjusting for inflation, the investment platform said.
The tax burden for the UK as a whole is also at its highest level since 1948. Latest OBR figures released with the spring budget show that tax as a proportion of GDP was 35.5% in tax year 2021 to 2022 and is expected to rise to 36.9% in 2023 and 37.7% by 2026. Tax as a percentage of GDP was 37.2% at the end of the Second World War in 1948.
Alice Guy, head of Pensions and Savings at interactive investor commented: “As a country, our current tax bill is even higher than in the 1970s, a time when the highest rate of income tax was 83% compared to 45% at present.
“Dividing the total amount of tax by the total population gives a figure of £13,884 tax paid for every woman, man and child in the UK and that figure will rise to £15,649 by 2027, compared to only £2,260 in 1953, after adjusting for inflation."
Guy continued: “Taxes are rising partly due to an aging population and increasing health and pension costs as more of us live for longer. By 2050 the proportion of the UK population over 65-years-old is projected to reach nearly 24%, up from 17% in 2012, according to the ONS.
“Then there’s also a huge mountain of Covid-related government debts, the total bill is estimated at £376 billion: that’s around £5,611 for every woman, man and child in the UK.
“But it’s not just costs that are pushing the government to raise taxes, it’s also the economic situation. There’s a risk that lowering taxes when inflation is high could further stoke the inflationary fires. It’s something Liz Truss ignored at her peril when she tried to lower taxes in her doomed mini budget last year. Once inflation drops back, the government may have a little more leeway to slightly lower the tax burden."
3.15pm: Raise a glass
Diageo has announced that Debra Crew, its chief operating officer (COO), will replace retiring long-time CEO Ivan Menezes, becoming one of only a handful of women to lead a company in the FTSE 100 index.
The Guinness stout, Johnnie Walker whisky, and Bombay Sapphire gin owner said Crew would take up her new role on July 1, bringing the total of female CEO of FTSE 100 members to 10.
An industry veteran who became COO last year, Crew had been president of Diageo North America, its largest market, and Global Supply from 2020. The former US military intelligence officer was previously CEO of tobacco company Reynolds American, where she had also served as COO. Prior to that Crew held roles at Pepsico, Kraft Foods, Nestle, and Mars.
Menezes, who joined Diageo after its formation through the merger of Guinness and Grand Metropolitan in 1997, has grown sales sharply and steered the company through multiple brand acquisitions as well as a major sustainability overhaul.
3.00pm: Tax goal
'Match of the Day' presenter Gary Lineker has scored in his appeal against the HMRC over a tax bill that totalled £4.9mln, Reuters has reported.
Lineker, who works on both BBC and BT Sport's coverage, was pursued by the HMRC over taxes on income from both broadcasters from 2013-14 to 2017-18.
The HMRC said he was an employee of both BBC and BT Sport at the time but a judge ruled the 62-year-old was a freelancer and had contracts with both broadcasters.
"The effect of my conclusions is that because there were direct contracts, between the BBC and Mr Lineker and BT Sport and Mr Lineker, the intermediaries legislation (IR35) does not, and cannot as a matter of law, apply," Tribunal Judge Brooks said in a statement. "Accordingly, and notwithstanding GLM (Gary Lineker Media)being a partnership, that is the end of the matter and the appeal succeeds."
Lineker made headlines earlier this month when he was suspended by the BBC for criticising government immigration policy caused a row over the broadcaster's impartiality rules. BBC managers reversed their decision to suspend Lineker, the broadcaster's highest-paid presenter, after his colleagues refused to work in solidarity, forcing it to air 'Match of the Day' as highlights without normal commentary.
2.45pm: Mixed New York progress
The FTSE 100 index ticked modestly higher as US stocks made mixed progress after opening lower as investors digested the latest developments in the banking sector.
After 15 minutes of trading, the Dow Jones Industrials Average had rallied to add 62 points, or 0.2% at 32,494, but the S&P 500 was still down 0.2%, and the Nasdaq Composite lost 0.6%.
FOREX.com market analyst Fiona Cincotta said although bank sector fears have eased, sentiment remains fragile.
“If the banking turmoil is contained then that could mean that the Federal Reserve will need to hike rates further rather than rely on a banking crisis recession to do some of the heavy lifting,” she noted. “Federal Reserve Governor Philip Jefferson reiterated the Fed commitment to rein in inflation but also noted that it could take some time as some areas of inflation, such as services are proving to be persistent.”
2.15pm: NFT scrapped
Britain is not going to get its own digital token as the Treasury said plans for the Royal Mint to create an NFT have been scrapped.
Economic Secretary Andrew Griffith announced the shelving in a written reply to a question from Tory MP Harriett Baldwin, something the Treasury later confirmed.
A relatively new concept, NFTs confer ownership of a collectible digital asset (such as images) but have been dogged by frauds, fees, rows over ownership and environmental criticism.
Ms Baldwin, chair of the Treasury Select Committee, told the BBC: "We have not yet seen a lot of evidence that our constituents should be putting their money in these speculative tokens unless they are prepared to lose all their money.
"So perhaps that is why the Royal Mint has made this decision in conjunction with the Treasury."
1.30pm: London's movers
A quick look at today’s fallers and risers in London
Risers
Unbound Group - up 93% to 7.7p Stock doubled in value in early exchanges after it said it is considering a bid approach that values the business at £6.8mln. The online fashion retailer targeting the over 55s said it would be “minded” to accept the deal if a firm offer is made for the business.
Corcel - up 9% to 0.34p Mining and resources group Corcel shot up on the junior market following the announcement of an equity placing to a cornerstone investor and the addition of Antoine Karam as a non-executive board member. The placing was part of a £1mln fundraising at 0.035p representing a 16.6% premium to the 30-day volume-weighted average.
Fallers
Synthomer - down 11% to 110p Shares slumped as the chemicals supplier reported an operating loss for 2022, caused by reduced demand. Revenue rose 11.2% to £2.38bn, which was less than the £2.56bn expected by City analysts, while the FTSE 250 group swung to an operating loss of £20.5mln from a profit of £296.5mln last time around.
1.00pm: Wall Street seen flat
Wall Street is expected to open little changed as investors remain cautious despite easing concerns over contagion in the banking sector following the collapse of Silicon Valley Bank.
Futures for the Dow Jones Industrial Average (DJIA) were flat in Tuesday pre-market trading while those for the broader S&P 500 index declined by less than 0.1% and contracts for the Nasdaq-100 eased back 0.1%.
Regional bank stocks soared on Monday after First Citizens BancShares agreed to buy most of SVB under a deal struck with the Federal Deposit Insurance Corporation (FDIC), helping the S&P 500 notch its third-straight winning session.
The DJIA closed 0.6% higher at 32,433 while the S&P 500 gained 0.2% to 3,978. But the Nasdaq Composite fell 0.5% to 11,767.
“The Fed added further support to First Republic Bank as First Citizens BancShares stepped in, agreeing to acquire Silicon Valley Bank assets and deposits, both of which have seen a stemming in the stress in regional banking franchises in the US,” commented TickMill Group market analyst Patrick Munnelly.
“However, it is likely too early to call the all clear as some investors remain on the sidelines waiting for the inevitable ‘next shoe to drop’. The overall improvement in the risk tone seen since the weekend has also weighed on interest rate expectations, with some market participants actively betting on rate cuts to begin later this year.”
Today, the Federal Reserve’s vice chair of supervision Michael Barr is set to testify in front of the Senate Banking Committee to face questioning on the SVB collapse and the Fed's plans to underpin financial stability in the light of the current crisis.
“The US data docket has little in the way of market moving data today; the only release of note is the conference board's consumer confidence survey which will likely be an early indication of the impact of banking concerns on consumer appetite, which is expected to show a decline for March,” Munnelly added.
12.40pm: Sterling edges higher after Bailey's comments
Sterling rose back to US$1.23, not far from a seven-week high of US$1.234 touched on March 23, after Bank of England Governor Andrew Bailey said that further monetary tightening would be required if signs of persistent inflationary pressure became evident.
He also said there were "big strains" in the global banking sector, but added that banks in Britain were resilient and able to support the economy.
With conditions in financial markets settling down traders are now pricing in a more than 50% chance of a 25 basis point interest rate increase at the Bank of England's next meeting in May. Traders had put this at 24% during the chaos on Friday.
In early afternoon trading, the pound was up 0.3% at US$1.2320. Meanwhile, the FTSE 100 is up 12 points.
12.22pm: French banks raided
Investigators searched the offices of several large banks in Paris on Tuesday, including BNP Paribas, Société Générale and HSBC, in the first French raids connected to the so-called “cum-ex” tax evasion scandal.
The raids were linked to five preliminary investigations launched in 2021 on alleged money laundering and fiscal fraud charges, France’s financial prosecutor’s office said in a statement.
The cum-ex scandal, which has led to raids and investigations in Germany, is centred around the alleged evasion of taxes and fraudulent scheme around dividend payments.
Natixis and Exane, the brokerage owned by BNP Paribas, were also targeted by the raid, a spokesperson for the prosecutors’ office added.
The FTSE 100 is resisting heading into negative territory for now, up 10 points.
12.04pm: FTSE 100 heads back to parity
Heading to lunchtime and the early morning lustre in the FTSE 100 has been lost with the lead index back close to opening levels.
The blue-chip index is now up just 4 points at 7,476 while the broader FTSE 250 has tumbled around 1% to 18,352.
Back to Parliament where the grilling of Andrew Bailey and his colleagues continues.
Conservative MP Danny Kruger asked Bailey whether all bank deposits should be guaranteed if a bank fails.
The BoE governor said he agrees with US Treasury secretary Janet Yellen that it should not be the norm that all bank deposits are guaranteed.
"I would not support, and I think this is exactly what Janet Yellen has said, the idea that 100% deposit guarantee becomes a norm," he said
On Credit Suisse Bailey said the bank received a ‘critical blow’, when its major shareholder said it would not put more money in adding that the Swiss lender “was experiencing a run”, as depositors lost confidence in its viability going forwards, even though it was in a strong solvency position.
11.38am: Ofwat calls on water firms to be more creative when billing
Water firms have been encouraged to be more "creative" in how they charge customers to help them cut bills and save supplies.
Under new Ofwat rules, Affinity Water, which supplies households across south-east England, will charge around 1,500 pre-selected households a cheaper rate for using a lower amount – or "block" – of water, and progressively higher prices for using larger volumes.
The firm said it expects at least two out of three homes in the trial, which begins later this year, to pay less for their water than they do currently.
Ofwat's announcement comes as households in England and Wales see the largest increase to their water bills in almost 20 years from April when they rise to an average £448 a year.
In a separate statement, United Utilities said it expected revenue in the financial year that ends on Friday to have lower revenue than previously expected, while underlying net finance expense is set to widen.
The Warrington, England-based water works said revenue is anticipated to be about 1% lower than previous guidance. In November, the company said it expected financial 2023 revenue to be around 1% lower than £1.86bn a year prior. It explained that the main reason for the revenue decline is lower consumption.
The firm said it expects underlying net finance expense to be around £10mln higher than its previous guidance and about £175mln higher than in financial 2022.
11.12am: BP links with ADNOC to buy stake in Israeli natural gas firm
Away from Parliament and BP PLC (LSE:BP.) has confirmed that, together with ADNOC, it has made a non-binding offer to take NewMed Energy private through an acquisition of the free float and a partial acquisition of Delek’s stake, which would result in BP and ADNOC holding 50% of NewMed Energy.
In a statement BP said, along with ADNOC, it intended to form a new joint venture that will be focused on gas development in international areas of mutual interest including the East Mediterranean.
When completed, this would strengthen the broader strategic partnership between ADNOC and BP across oil and gas, hydrogen and carbon capture and storage technology and would deepen the partners’ long-standing relationship, the statement said.
“This proposed transaction is consistent with bp’s stated strategy and financial frame including current guidance for capital expenditure,” BP said.
The two companies intend to explore a range of mechanisms for the formation and potential further expansion of their new partnership.
NewMed Energy said the offer price is 12.05 Israeli shekel per share. This would value the 50% stake at around US$2bn.
Shares in NewMed Energy rose nearly 30% while in London shares in BP are 2% to the good.
10.52am: Not facing a repeat of 2008 - Andrew Bailey
Andrew Bailey insisted that we are not facing a repeat of the financial crisis 15 years ago.
“I don’t think we are at all in the place we were in in 2007-08. We are at a very different place to then.”
“But we have to be very vigilant,” he added.
Deputy governor Sir Dave Ramsden said the Bank is keeping a close eye on bank funding costs, and the consequences of those changes on households and businesses.
Back on SVB and Anthony Browne MP noted that the run at Silicon Valley Bank was so quick because “a few VC funds told all their clients to withdraw their money” in a few WhatsApp messages.
PRA chief Sam Woods said that the Bank of England felt that confidence had been lost in SVB UK, due to what happened at its parent company, even though SVB UK had the capital strength to handle its outflows.
Bailey said there "were a number of possible offers" for the UK arm SVB but by 7 to 8pm on Sunday evening there was only one realistic offer left, which ended in HSBC's takeover of the bank announced at 7am on the Monday morning.
Woods described it as a "high pressure situation."
10.28am: Bailey says SVB collapse caught BoE by surprise
Over in Parliament and the Treasury Committee is quizzing top leaders from the Bank of England about the collapse and rescue of Silicon Valley Bank UK.
Asked did it come out of left-field and were you taken by surprise, Bailey agreed.
The collapse of SBV UK’s parent bank, in the US, was probably the fastest collapse the governor can remember in his 30-year career.
Bailey compares Silicon Valley Bank’s passage “from health to death” was the fastest since the collapse of Barings Bank (which failed in 1995 after rogue trader Nick Leeson ran up huge losses through unauthorised and concealed trading positions).
SVB, the governor, said “was a very fast passage to failure”.
But Bailey stressed he believed the UK banking sector is in a strong position – both in terms of capital, and liquidity.
He noted the US authorities are still dealing with some of the consequences of the issue on their regional banks but he felt Credit Suisse (which was rescued the weekend after Silicon Valley Bank) was “an institutional-specific issue”.
Commenting on Friday’s turmoil in the markets last Friday when Deutsche Bank’s shares took a tumble Bailey said he saw the "sharp market movements” as a sign that the strength of certain institutions is being “tested out” by the markets, rather than being based on “identified weaknesses”.
Sam Woods, CEO of the Prudential Regulation Authority, agreed that the Bank needs to think about this.
He said: “All of us can move money from our accounts in as short a time it will take me to answer this question. That is a relatively new feature of the market.”
The speed at which news can pass these days through communities, including through private messaging, is another factor, he added.
A third factor is the “concentrated basis” of the deposits at SVB UK, Woods continues – a reference to its customer base of tech start-ups.
The committee hearing continues.
10.01am: Mid-cap rally falters
While the FTSE 100 is holding in the green the mid-cap FTSE 250 has tumbled now down 0.4%.
Among the fallers are Synthomer (LSE:SYNT) were shares have dipped over 13% after the UK chemicals group said its performance reflected “challenging macroeconomic conditions” at the end of last year and noted “subdued” demand across most of its markets.
CMC Markets has slipped a further 5% after a trading update late in yesterday's session. Lower equity volumes and lower margin institutional business in February and March were behind a warning of new net operating income guidance of £280mln to £290mln against a consensus of £323mln.
Heading the other way was Softcat (LSE:SCT) which rose 5% after the London-based IT group posted £63mln in operating profit for the six months to January 31, ahead of initial expectations. The group added its full-year performance would beat previous estimates.
Peel Hunt called the numbers "very strong."
Reiterating a buy rating the broker said: "We continue to believe Softcat (LSE:SCT) is the best way of playing a number of pertinent thematics, ranging from: (1) cost optimal cloud adoption; (2) reducing cybersecurity risks; and (3) the medium-to-long term resilience of DX spend."
9.27am: 888's William Hill hit by record fine
Shares in 888 Holdings PLC (LSE:888) slipped in early trading after news that William Hill has been hit by a record fine by the Gambling Commission.
William Hill, which is owned by 888, will have to pay penalties of £19.2mln for failing to protect consumers and weak anti-money laundering controls.
The record penalty comes after the Gambling Commission found “widespread and
alarming” issues at the company, which led the commission to give “serious consideration” to spending the firm’s licence.
Andrew Rhodes, the Gambling Commission’s chief executive said, “because the operator immediately recognised their failings and worked with us to swiftly implement improvements, we instead opted for the largest enforcement payment in our history.”
The Commission found that customers were allowed to deposit large sums of money without the companies conducting any checks.
One customer was allowed to open a new account and spend £23,000 in 20 minutes without any checks. Another was allowed to open an account and spend £18,000 in 24 hours without any checks.
It is the latest scandal to hit 888 which at the end of January suspended VIP activities in some of its .com markets pending the outcome of an internal compliance investigation and, separately, announced the departure of Itai Pazner, its chief executive officer (CEO) and executive director.
Shares in 888 fell 1.4% to 53.76p in early exchanges in London.
9.00am: Blue chips rally
Blue chip stocks remained on the front foot on Tuesday as buyers dipped their toes back into the market after the recent volatility.
At 9.00am the FTSE 100 was up 35 points at 7,506.78. The gains were reflected in Europe where the Cac 40 advanced 0.8% and the Dax gained 0.7%.
Richard Hunter at interactive investor said: “Some semblance of calm may be returning to wider markets following the unwelcome recent shocks provided by stresses in parts of the banking sector.”
“It may be premature to call an end to what could have turned into a crisis given both the fragility of sentiment and, over the coming days, the possibility of any further unwelcome surprises. Even so, time heals all wounds and in the absence of any new negative news, a return to business as usual is possible.”
Top of the risers in the lead index was Ocado Group PLC (LSE:OCDO) after Ocado Retail’s (the joint venture with M&S) trading statement.
Hunter described the update as “something of a curate’s egg.”
He felt “with guidance unchanged and the outlook for earnings remaining “marginally positive”, there is little to excite investors in terms of any further measured progress for the Retail part of the business.”
Nonetheless shares rose 2.4% although they eased from earlier highs.
Banks continued to make steady progress recouping recent losses. Barclays PLC (LSE:BARC) rose 1.3%, NatWest Group PLC (LSE:NWG) firmed 1.2% and HSBC rose 0.9%.
Retailer Next PLC (LSE:NXT) gained 0.9% on reports it is looking at buying Cath Kidston following its recent purchases of Joules and Made.com.
Halma PLC (LSE:HLMA) said it has acquired FirePro, a maker of aerosol-based fire suppression systems, for €150mln (£132mln) sending shares up 1.3% but Diageo fell 0.5% after it announced that Ivan Menezes will retire as chief executive officer on 30 June 2023 and be succeeded by the current chief operating officer Debra Crew.
8.32am: Food inflation hits fresh high - Kantar
Market research firm Kantar reported that grocery prices surged by 17.5% over the last year, inflicting yet more pain on households who are battling a cost-of-living crisis.
The figures for the 12 weeks ending March 19 will have driven up average household bills by £837 unless shoppers shift their spending to cheaper outlets, or simply buy less.
Market researcher Kantar said prices were rising fastest in markets such as eggs, milk and cheese.
Volumes of tomatoes, peppers and cucumbers bought at independents rose 32%, 26% and 21% respectively last month, amid concerns about product shortages.
Fraser McKevitt, Kantar’s head of retail and consumer insight, said: “It’s more bad news for the British public, who are experiencing the ninth month of double-digit grocery price inflation.”
Kantar also noted that customers are shopping around for the best value, visiting three or more of the top 10 retailers each month. Footfall was up in every single grocer this month.
McKevitt added: “The supermarkets are also tackling grocery price inflation, battling it out to demonstrate value and get customers through their doors. This is a fiercely competitive sector and if people don’t like the prices in one store they will go elsewhere, with consumers visiting three or more of the top 10 retailers in any given month on average.”
Across the retailers Lidl was the fastest growing supermarket as its sales rose by 25.8%. It achieved a market share of 7.4%. Aldi secured a new record market share this month at 9.9%, driven by a 25.4% increase in its sales.
Morrisons saw a welcome return to growth with sales rising by 0.1%, giving it an 8.8% market share. Waitrose also had a positive period, pushing up sales by 2.1% to deliver the fastest rate of growth for the John Lewis Partnership owned supermarket since September 2021.
Asda’s sales increased by 7.3%, just ahead of both Tesco and Sainsbury’s on 6.9%. Tesco remains Britain’s largest grocer with a 26.9% share of the market, while Sainsbury’s is on 14.8% and Asda 14.3%.
Frozen specialist Iceland performed strongly, increasing its market share to 2.3%, up 0.1 percentage point as sales rose by 9.6%. Convenience retailer Co-op now has a 5.7% share and Ocado’s market share remained at 1.8%.
8.17am: FTSE 100 off to a bright start
The FTSE 100 opened higher as the Bank of England governor stressed the UK financial system remained resilient and well-placed to support the economy.
At 8.15am London's lead index was at 7,512.19, up 40.42 points, or 0.54%, while the FTSE 250 also improved to 18,577.79, up 48.17 points, or 0.26%.
Susannah Streeter, head of money and markets, Hargreaves Lansdown said: ‘’A relief ripple is helping stocks make some gains amid hopes that the volatility, which has wracked the banking sector, has eased off.”
“Right now, worries about the impact of banking turmoil are taking a back seat and the Bank of England is intent on steering consumer prices lower. Governor Andrew Bailey stressed in his speech in London last night that interest rates may have to move higher if there were signs of persistent inflationary pressure.”
Bailey said that recent financial turmoil would not stop the central bank controlling inflation with high interest rates.
In the speech at the London School of Economics, he stressed that the UK financial system was “resilient, with robust capital and liquidity positions, and well placed to support the economy”.
Streeter added: “For now, policymakers don’t see a threat to financial stability in the UK, given that banks are resilient with robust capital positions”
“The focus is on sticky prices and consumers are still in a jam with food price inflation hitting fresh record levels according to the British Retail Consortium. Shoppers are paying 15% more for the same goods compared to a year ago, with fresh food inflation accelerating to 17%.”
Those sticky prices were clear to see in latest shop price inflation figures which showed inflation intensified in March with food costs jumping at a record pace.
According to the latest British Retail Consortium-NielsenIQ tracker, UK shop price inflation accelerated to 8.9% in March, from 8.4% in February. It takes the inflation rate to a new high, the BRC said.
Non-Food inflation quickened to 5.9% in March, from 5.3% last month.
Food inflation picked up to 15% in March, up from 14.5% in February. Fresh Food inflation accelerated to 17% from 16.3%.
In company news shares in Ocado Group PLC (LSE:OCDO) jumped 5.4% after Ocado Retail, its joint venture with Marks and Spencer Group PLC (LSE:MKS) reported a rise in revenue in quarter one.
Retail revenue rose to £584mln, growth of 3.4% against the same quarter last year, average orders per week at Ocado.com improved to 381,000, up 3.6% year-on-year while the number of active customers reached 951,000 at the end of the quarter, up 13.8% year-on-year.
The rise in customer number reflected continued growth in new customers alongside holding onto existing shoppers (beyond the fifth shop), the company said.
The average basket value was flat, with a 7.5% fall in basket size, to 45 items, offset by a 8.3% increase in average selling price. Full year guidance was held.
Josh Warner, financial markets analyst at City Index said: “Ocado’s grocery joint venture with Marks & Spencer has delivered an important message this morning by pledging to return to sales growth and profitability in 2023.”
He noted: “Ocado sales grew faster than expected in the first quarter and the venture continued to add new customers to bring the 1mln milestone into view.”
“Customers continue to buy smaller baskets compared to during the pandemic, although this is being countered by higher prices and more frequent ordering.’
The recent rise in the oil price continued to underpin BP PLC (LSE:BP.), up 2.5%. Further support for the oil major came from broker Citi which has the firm to its conviction buy list in a number of changes made today. Other UK listed companies added to the conviction list were AstraZeneca and Glencore.
7.45am: BoE's Bailey stresses UK financial system remains resilient
Andrew Bailey, Governor of the Bank of England, said on Monday that recent financial turmoil would not stop the central bank controlling inflation with high interest rates.
In a speech at the London School of Economics, Bailey stressed that the UK financial system was “resilient, with robust capital and liquidity positions, and well placed to support the economy”.
He made no reference to the possibility that lending might be curtailed, instead reiterating the BoE’s position that interest rates would need to rise further if “any signs of persistent inflationary pressures” were detected.
In questions after his speech, Bailey insisted that nothing had recently happened in financial markets to make the Monetary Policy Committee act in ways to sooth tensions.
“Monetary policy has to take into account credit conditions . . . and we do,” he said.
“The key distinction is we have a financial stability policy that is ensuring financial stability and we did not have to sit down [at the recent MPC meeting] and say: ‘Do we need to use monetary policy to ensure financial stability?’
Bailey said the BoE had not already decided that interest rates needed to increase further but noted that inflation of 10.4% in February was “much too high”. He stressed that the MPC would assess the “emerging evidence” before opting to lift rates again.
Bailey also commented on the jobs market. He said the end of furlough in September 2021 had been expected to bring a jump in unemployment as businesses hit by the pandemic struggled to keep their staff on payrolls.
Instead, since the pandemic the labour market has been tight as hundreds of thousands of workers ruled themselves out of the labour force.
"The question was about whether firms would be able to survive the prolonged economic impact of the pandemic, let alone continue to invest in the future – or whether millions would be driven into unemployment as the Government furlough scheme, which remunerated those whose jobs were in effect suspended, was set to end at the end of September 2021," he said.
7.35am: Next to swoop for Cath Kidston?
Next is in advanced talks to buy Cath Kidston in its latest swoop on a prominent but troubled retail brand, according to Sky News.
Sky reported that the FTSE-100 chain, which has a market value of close to £8.7bn, could wrap up a deal to acquire the modern vintage label as soon as today. Banking sources said an agreement was likely but not certain.
Exclusive: Next is in advanced talks to buy Cath Kidston, the modern vintage brand, in a deal that would represent the FTSE-100 chain's latest acquisition of a prominent but troubled high street retailer. A deal could be struck as early as tomorrow. https://t.co/C6IWMOHtMm
— Mark Kleinman (@MarkKleinmanSky) March 27, 2023
Cath Kidston has been owned by Hilco Capital, the specialist retail investor, for less than a year.
The move would be the latest by Next's as it builds a portfolio of wholly owned retail labels.
Among the brands it has bought are Made, the online furniture retailer, and Joules, the fashion group which collapsed into administration late last year.
7.31am: Price rises ofsset falling basket size at Ocado Retail
Ocado Retail Ltd reported modest growth in quarter one revenue as increased prices offset the amount shoppers were putting in their baskets.
The joint venture between Ocado Group PLC (LSE:OCDO) and and Marks & Spencer Group PLC was updating investors on trading for the 13 weeks to February 26 and said guidance remains unchanged.
Retail revenue rose to £584mln, growth of 3.4% against the same quarter last year, average orders per week at Ocado.com improved to 381,000, up 3.6% year-on-year while the number of active customers reached 951,000 at the end of the quarter, up 13.8% year-on-year.
The rise in customer number reflected continued growth in new customers alongside holding onto existing shoppers (beyond the fifth shop), the company said.
The average basket value was flat, with a 7.5% fall in basket size, to 45 items, offset by a 8.3% increase in average selling price.
Guidance was held with the firm expecting mid-single digit growth in revenue with an improving trajectory during the year and marginally positive EBITDA.
Chief Executive Hannah Gibson said: “While the trading environment remains challenging, we expect to build momentum through the second half of the year, as we improve our proposition, grow our customer base, and no longer lap Covid shopping behaviours. This solid 2023 performance will enable us to return to sales growth and profitability."
7.09am: Shop price inflation accelerates in March - BRC
UK shop price inflation intensified in March with food costs jumping at record pace, latest figures showed.
According to the British Retail Consortium-NielsenIQ tracker, UK shop price inflation accelerated to 8.9% in March, from 8.4% in February. It takes the inflation rate to a new high, the BRC reported.
Non-Food inflation rose to 5.9% in March, from 5.3% last month while food inflation increased to 15% in March, from 14.5% in February. Fresh Food inflation accelerated to 17% from 16.3%. It was the highest-ever rates of inflation for food and fresh food, the BRC noted.
"Shop price inflation has yet to peak. As Easter approaches, the rising cost of sugar coupled with high manufacturing costs left some customers with a sour taste, as price rises for chocolate, sweets and fizzy drinks increased in March. Fruit and vegetable prices also rose as poor harvests in Europe and North Africa worsened availability, and imports became more expensive due to the weakening pound. Some sweeter deals were available in non-food, as retailers offered discounts on home entertainment goods and electrical appliances," BRC Chief Executive Helen Dickinson commented.
"Food price rises will likely ease in the coming months, particularly as we enter the UK growing season, but wider inflation is expected to remain high. Retailers continue to work hard to keep prices, particularly of essentials, as low as possible by expanding value ranges and offering discounts for vulnerable groups."
7.00am: FTSE 100 seen higher
The FTSE 100 is expected open higher on Tuesday building on yesterday's gains.
Spread betting companies are calling London’s lead index up by around 28 points.
CMC’s Michael Hewson said: “Sentiment seems likely to remain on the cautious side over the next few days. This caution was reflected in the extent of yesterday's rebound in bank stocks given that none of the gains seen yesterday came close to reversing the losses seen from last Friday."
Stock prices in New York moved mostly higher on Monday as the sale of Silicon Valley Bank lifted the mood, although tech stocks lagged behind.
The Dow Jones Industrial Average closed up 194.55 points, or 0.6%, at 32,432.08. The S&P 500 rose 6.54 points, or 0.2%, at 3,977.53 but the Nasdaq Composite slipped 55.12 points, 0.5%, to 11,768.84.
In Asia, the Nikkei 225 index was marginally higher. In China, the Shanghai Composite was up 0.2%, while the Hang Seng index in Hong Kong was up 0.8%.
Back in London and the early focus will be trading updates from Ocado Retail, the joint venture between Ocado Group PLC (LSE:OCDO) and Marks and Spencer Group PLC (LSE:MKS) and Darktrace. BRC shop price inflation and Kantar grocery market share and inflation are also due.
Bank of England Governor Andrew Bailey is also due to speak before the UK's Treasury Committee.