- FTSE 100 lower, down 15 points at 7,509
- Miners lower amid growth concerns in China
- RyanAir expects record August traffic
4:30pm: FTSE 100 closes just above 7,500
London’s blue-chip benchmark finished Monday’s trading some 17 points or 0.23% lower, marking the close at 7,507.
3.56pm: RyanAir expects record August traffic
Ryanair expects traffic in August to “slightly” beat its record ever numbers – achieved last month – as it proves to be a major beneficiary of the surging demand for travel.
Passenger numbers will surpass the record 18.7m passengers it flew in July, with bookings for September and October so far coming in exactly as expected, a senior executive told Reuters on Monday.
Eddie Wilson, the head of Ryanair DAC, the largest airline in the group, said:
It should be slightly more ... people are still travelling.
The airline last month reported that its profits had quadrupled since the spring, although chief executive Michael O’Leary has said prices may need to fall in the winter.
3.15pm: CVC revives float plans - FT
One of Europe’s biggest buyout groups, CVC Capital Partners, has revived plans for a multibillion-euro stock market listing that could come before the end of the year, according to people familiar with the matter.
The Financial Times has the news reporting the secretive firm, which owns the maker of PG Tips tea and has made major bets on rugby and Formula One, pushed back a planned listing last year as markets plummeted following Russia’s invasion of Ukraine.
But a rebound in markets and the firm’s raising of a record €26 billion buyout fund last month have made conditions look more favourable, the people said, according to the report.
However, they cautioned that no final decision has been taken and the plan could still change.
2.45pm: Mixed start across the pond
It was a mixed picture on Wall Street as stocks continued a sluggish start to August dented by concerns about the health of China’s property sector.
Shortly after the opening bell, The Dow Jones Industrial Average had edged up 14.01 points at 35,295.41, the S&P 500 was down 7.36 points, 0.2%, at 4,456.69 while the Nasdaq Composite was 52.97 points, 0.4% at 13,591.88.
Fawad Razaqzada, market analyst at City Index and Forex.com said: “Concerns surrounding the perilous financial state of some of China’s largest property developers and the nation’s post pandemic economic struggles have dented investor sentiment.”
Shares in Country Garden slumped to a record low on Monday after the Chinese property developer suspended trading in at least 10 of its mainland bonds.
The company, formerly the largest developer in China by sales, missed international bond payments last week and at the weekend said several bonds issued by the company and its subsidiaries would be suspended from trading this week.
Jennifer McKeown at Capital Economics said: "The immediate global economic and market fallout from troubles at Chinese property developer Country Garden seems likely to be limited."
"Foreign exposure to China’s property sector has fallen sharply over recent years and policymakers should step in to prevent a meltdown in China."
"However, the developer’s problems are indicative of a structural downturn which will shape the global economy for years to come," she added.
Stocks on the move include US Steel Corp which 25% after the company rejected a takeover offer from peer Cleveland-Cliffs Inc. (NYSE:CLF) (Cleveland-Cliffs Inc. (NYSE:CLF)) and said it will instead start a review of its strategic options.
Tesla Inc (NASDAQ:TSLA) (Tesla Inc (NASDAQ:TSLA)) slipped 3.0%, triggering a sell-off for other producers of electric vehicles, after it rolled out a new round of price cuts in China. Rivian Automotive fell 3.6% in response.
Elsewhere, retailers will be in the spotlight with retail sales figures tomorrow plus earnings from Home Depot, Target and Walmart.
2.05pm: Italy's PM takes full responsibility for windfall tax fiasco
Italy’s prime minister Giorgia Meloni has taken “full responsibility” for last week’s controversial decision to impose a one-off windfall tax on banks, which she described as her own.
“I would do it again because I believe that the right things must be done,” she said in comments to Italy’s three largest newspapers.
“This is a decision that I took on my own.”
The unexpected announcement last week crippled the rightwing government’s credibility with investors and sent shockwaves through financial markets.
Italian bank stocks lost up to 10% on the day the 40% tax on lenders’ net interest income was announced.
Less than 24 hours later, the government was forced to partially backtrack, with the finance ministry announcing a cap on the levy that substantially watered down its effect on lenders’ balance sheets
1.30pm: Here’s a look at the risers and fallers on the junior end of the market today
Shares in the data group Glantus Holdings PLC (AIM:GLAN) shot up 65% after it agreed to be taken over by Finnish procurement specialist Basware in a £17.8 million deal.
The 33.42p per share offer tabled by Basware’s bid vehicle represents a 67% premium to Friday’s closing price.
Global Petroleum (AIM:GBP) rose 4.5% as the Namibian Ministry of Mines and Energy gave approval for its consortium to move to the first renewal period (FRP) of Walvis Basin licence PEL 94, with a duration of two years from September 2023 to September 2025.
Inspirit Energy Holdings PLC (LSE:INSP) shares dropped 16% to 0.019p in early Monday trading due to manufacturing errors identified in a key component of their Waste Heat Recovery (WHR) system.
During a test visit to its Polish facility, flaws were detected in a component crucial for the Helix Accelerator's drive. Shares have since recovered to 0.021p.
Serinus Energy PLC (AIM:SENX) fell 16% following the release of first-half results, which revealed the impact of falling oil prices on the producer.
The Jersey-based company, which has operations in Tunisia and Romania, saw its revenues drop to $8.9 million in the six months ended 30 June 2023, compared with $29.3 million during the same period in 2022.
1.00pm: Lok'n Store growth story "remains compelling"
Lok'n Store Group PLC offers a growth opportunity that “remains compelling,” according to Peel Hunt.
The broker was commenting after the self storage space provider updated the City on trading for the year to July 31.
It noted 2023 self-storage revenue was up 5.3%, or 12.1% on a like-for-like basis, which looks “marginallt ahead of our own forecasts.”
Peel Hunt plans on leaving its forecasts unchanged which means the shares sit on a circa 20% discount to adjusted net asset value and offer a dividend yield forecast to exceed 3%.
“In our view, the growth opportunity remains compelling,” the broker added.
Shares rose 1.9% to 745.60p around Monday lunchtime.
12.33pm: Tourist tax knocks spending in London
Tourist spending in London has plunged due to the government’s post-Brexit tourist tax, a survey has showed.
Tourists from the US and the Gulf region reduced their spending in the West End by 1% and 17%, respectively, in the three months to June compared with the same period in 2019, according to research by the New West End Company.
This is despite flight bookings from these regions rising by 17% and 7% against the second quarter of 2019.
During the same period, spending by American visitors rose by 183% in France and by 174% in Spain, with tourists from the Gulf spending 118% extra in France and 112% more in Italy.
The decision to end VAT-free shopping for visitors from outside the European Union after Brexit has prompted concern from several leading business figures.
Kwasi Kwarteng promised to scrap the additional 20% tax on purchases last year when he was chancellor, but the decision was reversed by Jeremy Hunt, his successor.
12.03pm: Bright start to the week expected on Wall Street
The Nasdaq looks set to lead US markets higher at the open on Monday after making a sluggish start to August.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.2% higher, while those for the S&P 500 rose 0.3%, and contracts for the Nasdaq 100 futures were up 0.4%.
The tech-laden Nasdaq fell 1.9% last week taking its losing streak to two weeks for the first time this year.
Earnings this week will focus on the health of the consumer with results from the likes of Walmart, Target, and Home Depot. Today, there is a tech theme as CRM stock Monday.com releases second quarter earnings.
Aside from earnings the key release will be the latest Federal Open Market Committee minutes as investors look for clues as to Federal Reserve's next move on interest rates.
The Fed is widely expected to leave interest rates unchanged at its next meeting but investors will be closely monitoring the language in the minutes to gauge the tone towards future policy.
Concerns over the health of the Chinese property sector may limit gains after the country’s biggest private property developer, Country Garden, said it would suspend trading in some bonds.
“A crisis in the Chinese real estate sector is a story the market has heard before and not one which has typically come with a happy ending for stocks,” said AJ Bell investment director Russ Mould.
But for now, futures are indicating US markets are shrugging this development aside.
11.29am: Consumer confidence knocked by rising mortgage rates
Consumer confidence continues to decline as soaring mortgage rates hit household finances.
Confidence, which had been improving since the aftermath of the mini-Budget, slid for the second month in a row in July, according to polling by YouGov and the Centre for Economics and Business Research (Cebr).
Overall consumer confidence declined by 1.6 points last month, according to YouGov’s poll of 6,000 people, falling to 100. The score means the nation is “neutral” on the economy, having previously been slightly optimistic.
The public have become more pessimistic about personal finances, house prices and the outlook for businesses since YouGov’s last survey.
The shift in sentiment over recent months has coincided with a surge in mortgage rates that began at the end of May.
Kay Neufeld, head of forecasting at Cebr, said that “concerns about rising mortgage rates and wider housing cost pressures” were likely behind wobbling confidence.
11.03am: Rouble falls to 16-month low
The Russian rouble has fallen to a 16-month low against the dollar as a surge in Russian military spending and a collapse in export revenues add pressure to a currency suffering under western sanctions and an escalation of capital outflows.
Russia’s currency has lost about 25% of its value this year as the impact of the war with Ukraine continues to take its toll.
The decline has more than offset the rouble’s rise last year when Russia’s initial invasion of Ukraine was followed by a sharp increase in oil and gas prices.
The drop has accelerated in recent weeks, raising pressure on Moscow after western sanctions limited capital inflows and European countries weaned themselves off Russia’s energy supplies, reducing the revenues it receives from oil sales.
10.23am: B&M could benefit from Wilko collapse - Deutsche
Better news for investors in B&M European Value Retail SA (LSE:BME) with shares top of the FTSE 100 risers after Deutsche Bank increased its share price target.
Analyst Adam Cochrane points out discount retailers have been a winning retail category over the last decade and B&M saw a step change in sales and profitability during Covid.
Margins have been raised despite FX headwinds and inflationary pressures while the Wilko administration offers further opportunity for B&M to take market share, he thinks.
This is in addition to an acceleration in the pace of new store openings in the UK and France.
"In our view, investors will focus on a company delivering a much higher ROCE, actively deploying capital into new store growth and returning cash to shareholders," Cochrane said.
He raised his share price target to 680p from 610p offering "c.25% upside potential in addition to an expected c.6-7% dividend yield."
Cochrane reiterated a buy rating and shares rose 3.1% to 554.20p.
9.57am: Chinese property jitters keeps London lower
The jitters surroung China's property market continue to keep a lid on shares in London with the FTSE now down 14 points.
Chinese property giant Country Garden’s debt problems deepened after its onshore bonds were suspended, sending its shares plunging 16% to a record low on Monday.
Country Garden's January 2024 dollar bond is yielding 2500%. Trading at 9 cents. Any takers? pic.twitter.com/ASRO9OMC46
— David Ingles (@DavidInglesTV) August 13, 2023
“A crisis in the Chinese real estate sector is a story the market has heard before and not one which has typically come with a happy ending for stocks,” says AJ Bell's Russ Mould.
“News China property giant Country Garden had missed bond payments as it racked up big losses was always likely to prompt selling in Asian markets and that’s fed through to the European open.
“This latest calamity is reflective of a recovery which has not lived up to expectations since the world’s second largest economy ditched zero-Covid measures at the end of last year."
"The one silver lining for the West may be a deflationary impact from China’s woes which helps in the battle against inflation," he added.
9.32am: UK employers rasing pay to keep staff
It’s a key week for UK data with inflation, unemployment and average earnings figures released this week.
A survey out today shows UK employers are expecting to continue raising pay for staff as they battle to retain people, even as the economy is expected to stutter.
Businesses expect to offer pay rises of up to 5% over the coming year, the highest level since 2012 and sustained from the last two quarters, according to the poll of 2,000 human resources executives by the Chartered Institute of Personnel and Development (CIPD), a professional body.
Our latest Labour Market Outlook report for Summer 2023 is here ☀️
The quarterly survey of 2,000 employers provides analysis on employers’ recruitment, redundancy and pay intentions combined with unique insights on labour market topics ????
Many employers have hard-to-fill… pic.twitter.com/nle0rwh2dV
— CIPD (@CIPD) August 14, 2023
More employers also expect to try to retain staff who have said they want to leave with counteroffers – trying to beat offers from elsewhere with pay increases or other perks.
Around 40% of UK employers have made a counteroffer in the past 12 months, the CIPD said, while 38% of employers who made offers matched the salary of the new job offer and 40% offered even higher sums.
The findings suggest the UK labour market remains tight, with unemployment still near record lows at 4% in May, although it did increase more than expected from 3.8% in April.
8.55am: Miners drag the FTSE 100 lower
The FTSE 100 remains in the red with mining stocks holding equities back on the news coming out of China.
Susanah Streeter at Hargreaves Lansdown noted: "’Worries about deeper cracks appearing in the Chinese property sector kept the FTSE 100 on a losing streak in early trade, as concerns continue to swirl about the health of the world’s second largest economy."
"Problems are piling up at real estate giant Country Garden, which not only warned of multibillion-dollar losses, but also missed key interest payments on its debt and is suspending trading on 11 of its onshore bonds."
Concerns over the health of the Chinese economy has been a theme of the past two weeks and the jitters surrounding the property sector in the world's second largest economy are just adding to the narrative.
Fallers in the lead index are led by Rio Tinto Ltd, closely followed by Anglo American, Fresnillo and Glencore PLC (LSE:GLEN).
Entain contines to lose ground after last week's worse-than-expected charge relating to a probe into its former Turkish business while a weak oil price weighs on BP PLC (LSE:BP.) and Shell PLC (LSE:SHEL, NYSE:SHEL).
Brent crude has slipped 0.8% to $86.10/barrel, again reflecting concerns over growth in China.
8.35am: YouGov mulls US listing - Financial Times
YouGov PLC (AIM:YOU), the UK-listed pollster and data analytics firm, is weighing up a US listing in what would be another blow to the London Stock Exchange, reports the Financial Times.
Stephan Shakespeare told the FT the group was considering moving its listing following a recent acquisition that has bolstered its operations.
“I think the markets are better at supporting companies like ours there,” he told the FT.
The US is the largest market for YouGov, where it works with US tech groups and consumer brands as well as providing detailed political coverage.
e said that the company could move its primary listing to the US or establish a secondary listing.
Shakespeare, with his family, owns about 8% of the company, which floated in London in 2005 and is valued at more than £1 billion
Shares in the firm were 0.2% hgher at 946p.
8.15am: FTSE follows Asia lower
The FTSE 100 has edged lower in early trading, after falls in Asian and US markets, with investors already looking ahead to inflation figures later this week.
At 8.15am, London’s lead index was down 18.24 points, 0.2%, at 7,505.92 while the FTSE 250 fell 22.13, 0.1%, at 18,777.57.
“The lead from other major markets left the UK with nowhere to go, although the losses were limited in opening exchanges,” said Richard Hunter at interactive investor.
Asian markets slipped on concerns over the property sector while in the US on Friday stronger-than-expected wholesale price figures muddied the waters.
Wednesday’s inflation data is expected to show the annual inflation rate fell to 6.7% in July, slightly lower than the Bank of England’s 6.8% forecast, and a significant drop from 7.9% in June.
The core figure, excluding food and energy is expected to dip slightly to 6.8% in July from 6.9% in June.
On a quiet morning for company news, shares in Plus500 Ltd (LSE:PLUS) rose 1.3% after its half-year results.
Analysts at Liberum said: “Against a backdrop of calmer markets, Plus500 delivered a robust performance in 1H23.”
The broker highlighted “the strength of the business model, the high levels of cash generation that result, and management’s commitment to maximising shareholder returns.”
“The market continues to underappreciate (ignore?) and undervalue this,” Liberum reckons.
YouGov PLC (AIM:YOU) was a touch firmer, up 0.7%, on reports it is mulling a US listing while B&M European Value Retail SA (LSE:BME), rose 1.7%, as Deutsche Bank raised its price target and reiterated a ‘buy’ rating.
The German investment bank increased its price target to 680p from 610p.
7.50am: Shaftesbury strikes £200 million loan deal with Aviva
Shaftesbury Capital PLC has struck a £200 million loan with Aviva Investors.
The FTSE 250 company said the agreement covered a 10-year period and was backed by a portfolio of assets within the Carnaby estate.
It said the newly-established facility would complement its existing secured term loans from Aviva Investors, valued at £130 million and £120 million and set to mature in 2030 and 2035, respectively.
The proceeds will be used to repay in part the £576 million unsecured loan which was drawn in April to fund the repayment of the Shaftesbury secured bonds.
7.39am: Plus 500 launches new buyback as earnings fall
It’s a quiet morning for company news. But FTSE 250-listed Plus 500 has released half-year results to June 30.
The fintech group reported revenue of $368.5 million compared to $511.4 million the year before while Ebitda of $174.1 million was down from $305.3 million.
Ebidta margins fell to 47% from 60%.
The firm launched a $60.0 million buyback programme, comprising an interim buyback programme of $33.7 million and a special buyback programme of $26.3million.
Shareholders were further rewarded with an interim dividend of $0.4125 per share and a special dividend of $0.3219.
The company expects revenue and Ebitda for the current financial year to be in line with current market expectations.
7.03am: Subdued start seen in London afetr falls in Asia
It looks like a weak start to the week in London following falls in Asian markets over concerns of defaults in the Chinese property sector.
Spread betting companies are calling the FTSE 100 down by around 14 points after closing down 94.44 points at 7,524.16 on Friday.
Michael Hewson at CMC Markets said: “Asia markets have fallen sharply this morning as a sell-off on Chinese markets, amidst concern over defaults in its property sector, and broader economic weakness has prompted fears that this weakness could spread to other areas of the economy, after it was claimed that a Chinese trust company failed to make payments to some clients."
Shares in Chinese property giant Country Garden slumped around 16% after it missed bond payments and warned of multibillion-dollar losses, deepening concerns over the nation's heavily indebted real estate sector.
In Asia, the Nikkei 225 index in Tokyo was down 1.2%. In China, the Shanghai Composite was down 0.9%, while the Hang Seng index in Hong Kong was down 2.4%.
Back to London, and it’s a quiet start to the week with results from CentralNic, Plus500, and Stelrad.