- FTSE 100 closes up 15 points at 7,390
- Barclays lower after mixed results, cuts UK guidance
- CAB Payments share plummet, cuts guidance
4:43pm: FTSE lifted by gains in the US
The FTSE 100 rallied in late trading boosted by a positive start across the pond to end the day in positive territory.
At the close, London's blue-chip index was up 14.87 points, 0.2%, at 7,389.70 while the FTSE 250 was down 64.89 points, 0.4%, at 16,994.10.
Barclays was a big faller, down 6.4%, after it reduced UK margin guidance in a mixed bag of results which dragged fellow lenders, lloyds and NatWest lower. Experian (LSE:EXPN) tumbled in late trading to end 10% lower.
Rio Tinto was the top riser, up 3.3%, after Barclays upgraded yo overweight while Astra Zeneca advanced 3.6% after positive drug updates and after its chief executive yesterday quashed talk he was quitting.
In the FTSE 250 the big story of the day was CAB Payments, down an astonishing 72%, just three months after floating on the UK stock market.
4:18pm: Asos delays results to complete audit
Asos PLC has just announced it is delaying publication of its annual results by one week although it stressed financial guidance remained unchanged.
The online fashion retailer will now announce its financial 2023 results on November 1 to allow its auditor, PwC, to complete its planned testing. PwC has assured the board that the outstanding procedures are limited in nature, Asos said.
The results had been due tomorrow.
But it said performance for the period to September 3 is in-line with that reported at the post-close trading update on September 26.
It expects to report full year adjusted group revenue of £3.54 billion, second half adjusted earnings before interest and tax of more than £38 million, resulting in a full year adjusted EBIT loss of no more than £31 million.
Alongside the results, Asos Chief Executive José Antonio Ramos Calamonte will host a strategy update which will feature a series of short presentations from senior management who will provide a broader update on the medium-term outlook.
Shares in Asos were down 3.3% at 388.20 pence in late trading.
3:52pm: US private sector expands in Occtober
The US private sector saw moderate expansion in October, following largely stagnant output in September and August, according to the latest flash estimate from S&P Global on Tuesday.
The headline S&P Global US purchasing managers' index rose to 51.0 in October, from 50.2 in September.
Rising above the 50.0 no-change mark, it signalled a modest up-tick in business activity in the month.
The latest flash #US #PMI data revealed growth in private sector output as the headline Index posted a three-month high of 51.0 (Sep: 50.2). The upturn was supported by quicker expansion across the manufacturing and services sectors. Read more: https://t.co/1XBUXXbXlH pic.twitter.com/oaZYkobc6T
— S&P Global PMI™ (@SPGlobalPMI) October 24, 2023
S&P Global said the upturn was supported by expansions in activity for manufacturers and service providers alike. It noted that demand conditions for manufacturers improved for the first time since April, while service providers witnessed a slower drop in new orders.
3:15pm: Britons plan less trips out this Christmas
A report suggests that Britons are planning to party at home and save on trips out this festive season as the cost of living crisis continues to put a dampener on celebrations.
A third of 25- to 34-year-olds are planning to host parties in their living rooms this festive season, a 10% increase on last year, as 38% of all Britons say they are planning to go out less in the next few months, according to a nationwide report by the supermarket group Tesco.
The number of people visiting hospitality venues, including pubs and restaurants, is expected to fall by 4.5%, according to a separate report for the discount site VoucherCodes, piling further pain on businesses already suffering from increased costs and lacklustre consumer spending.
2:44pm: Buoyant US markets fail to lift London
Not even a buoyant start in the US can spark London into life today with the FTSE 100 down 12 points at 7,363.
A number of upbeat earnings have helped US markets with results from Alphabet and Microsoft to follow after the market close.
Shortly after the opening bell, the Dow Jones Industrial Average was up 288.67 points, 0.9%, at 33,225.08, the S&P 500 up 31.22 points, 0.7%, at 4,248.26 and the Nasdaq Composite was 94.01 points, 0.7%, at 13,112.34.
General Electric (NYSE:GE) rose 3.6% after raising its 2023 outlook for profit and cash flow as it prepares to complete its three-way demerger in the first half of next year.
The conglomerate said revenue in the three months to September 30 soared 20% to $17.35 billion from $14.47 billion the year before.
GE has already spun off its healthcare arm, establishing New York-listed GE HealthCare Technologies Inc, and intends to split its two remaining units, GE Aerospace and energy business GE Vernova, in the second quarter of next year.
The Coca-Cola Company (NYSE:KO) raised its revenue and earnings outlook after rising prices drove a strong third quarter, sending shares 3.3% higher.
The Atlanta, Georgia-based soft drinks maker said net revenue in the quarter ended September grew 8% to $12.0 billion, and organic revenue grew 11%.
Revenue performance included 9% growth in price/mix and 2% growth in concentrate sales, the firm said.
Elsewhere, results saw gains for 3M, up 5.1%, RTX, up 5.8%, Verizon, up 7.0%, and Spotify, up 5.0%.
But General Motors fell 0.1% after the Detroit carmaker withdrew guidance due to the uncertainty caused by the car workers strike.
GM said strike action had so far cost it $800 million in earnings before interest and taxes, with another $200 million lost each week as the walkout drags on.
2:08pm: Could an IPO boost for London be on the way?
Bloomberg is reporting that two high-profile UK fintechs are weighing stock market listings in London which would be a boost to the flagging new issue market.
The report said Starling Bank is considering starting preparations for an initial public offering and has received pitches from several investment banks including Rothschild & Co. in recent weeks, citing people familiar with the matter.
Separately, a senior London Stock Exchange Group PLC executive met with Thought Machine chief executive officer Paul Taylor on the sidelines of a technology industry gathering last month to lobby him about a share sale in the UK, the people said.
The two London-based firms aren’t expected to list imminently, according to the people.
Starling would have to appoint a permanent chief executive before it’s ready for a public listing.
Bloomberg quoted a statement from Thought Machine.
"“While an IPO remains a long-term goal for the company, we’re currently in an early exploratory stage and do not have specific timelines or updates to share at this time,” it said.
1:03pm: Manufacturers cut staff for first time in three years
The CBI has said that UK manufacturers cut employee numbers for the first time in nearly three years as output contracted in the quarter to October, according to the business trade body’s latest industrial trends survey.
The embattled Confederation of British Industry said that its latest survey for the quarter to October showed that the “red lights are flashing” in the UK manufacturing industry.
The latest CBI Industrial Trends Survey found that output volumes fell in the quarter to October, though less steeply than in the three months to September. Firms expect volumes to return to growth in the next three months. #ITS pic.twitter.com/CiOayqoeA8
— CBI Economics (@CBI_Economics) October 24, 2023
Anna Leach, deputy chief economist at the lobby group, said that the chancellor needs to use November’s autumn budget statement to reinvigorate the sector by encouraging investment and skills development.
“The warning lights are flashing red in our latest manufacturing survey, with business sentiment deteriorating, output volumes falling and manufacturers becoming more cautious over their employment and investment plans.
The survey, which is based on the responses of 253 manufacturing firms, found that the numbers employed fell marginally in the three months to October, the first time since January 2021.
It also found that output volumes declined in 11 of the 17 manufacturing sub-sectors, driven by lower volumes in the chemicals, metal products, building materials and furniture & upholstery sub-sectors.
However, manufacturers expect output volumes to return to growth over the next three months.
12:41pm: UK to scrap caps on bankers bonuses - FT
The UK will on Tuesday confirm that it is scrapping caps on banker bonuses as part of its post-Brexit bid to boost the City of London, the Financial Times reported, citing people familiar with the situation.
The move follows a consultation earlier this year on plans to abolish a 2014 regime inherited from the EU that limits bonuses to twice base pay for employees of banks, building societies and investment firms.
The UK’s top financial regulators argued against the ban when it was introduced and the government has argued that lifting the ban will increase the competitiveness of the City.
The Treasury declined to comment on the imminent announcement, as did the Financial Conduct Authority and the Prudential Regulation Authority, the regulators that jointly carried out the review.
12:05am: Big Tech earnings in focus in the US
It's a big day for earnings in the US and futures are up with two of the Magnificent Seven, Alphabet and Microsoft, reporting after the market close.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.3% higher, while those for the S&P 500 were up 0.4%, and contracts for the Nasdaq 100 futures fell 0.5%.
Peter Garnry head of equity strategy at Saxo thinks Microsoft and Alphabet earnings “are crucial for equity sentiment as the US technology sector has seen 12-month forward earnings expectations rising significantly more than the S&P 500 Index this year raising the stakes.”
Ahead of that, the market will be digesting a slew of earnings from the likes of Coca-Cola, Verizon, General Electric (NYSE:GE), RTX, 3M, General Motors, Kimberly-Clark, and Halliburton.
Spotify was quick out of the blocks with its numbers swinging to a profit in the latest quarter as a cost-cutting drive paid off and its recent price hike did not dissuade sign-ups.
The music streaming service reported net income of €65 million on €3.4 billion in revenue in the three months to September 30.
Operating expenses were down 13% from the same period a year ago, when Spotify lost €166 million.
“We are encouraged by the early results we have seen from select efficiency initiatives”, Spotify said in a statement.
11:42am: Rio Tinto to benefit from resilient demand for iron ore
Rio Tinto should benefit from more resilient demand for steel and iron ore in China with official data appearing to be significantly understating pig iron production this year, explaining why iron ore prices have been so resilient.
That was the view of Barclays after it spent a week in China with over 20 meetings with local miners, traders, developers and economists.
While more pain looks set to come in the real estate market, manufacturing has surprised to the upside, it said,
The bank said its meetings suggested robust steel demand into next year, which reinforced its positive view on iron ore.
Barclays has upgraded Rio to overweight from equal weight highlighting the supportive iron ore demand trends, limited low-cost supply growth and favourable seasonality for iron ore.
It thinks Rio's share price is at an "attractive valuation."
11:07am: DFS Furniture lifted by ScS bid
Some other stocks on the move today worth keeing an eye on.
Shares in DFS Furniture has jumped 7.2% in the wake of the bid for ScS Group - which has sent its shares 60% to the good - as investors look for the next bid target in the sector but it is not such good news for Softcat (LSE:SCT), down 11%.
The IT infrastructure and services provider delivered a strong set of results and held guidance although it indicated profits would be more weighted to the second half.
Analysts at Jefferies noted this caveat and suggested while existing investors will "likely back management to deliver sustainable growth," new investors may "prefer to wait for greater visibility on the 2H trends."
10:45am: Kingfisher faces weaker French demand, competition threat
The FTSE 100 continues to rally from earlier lows, now down 13 points, at 7,362.
Banks remain a drag with Barclays, Lloyds and NatWest all lower but mining stocks and utilities are providing support.
One share in the red though is DIY retailer, Kingfisher, the owner of B&Q, Castorama, Brico Dépôt, Screwfix and TradePoint.
Shares are 1.9% lower after downbeat comments from JPMorgan.
It thinks consensus financial 2025 forecasts for both the UK and France are over ambitious – it is around 10% below consensus - particularly with the latter seeing signs of a weakening consumer.
It has reiterated an underweight rating and placed the stock on negative catalyst watch ahead of the third quarter trading update on November 22.
JPM pointed out a September 2023 survey results show a significant worsening in the outlook for French DIY spend with the net balance falling to -22% while recent profit warnings in France could signal a weakening consumer.
Longer mortgages in France provide some protection in a rising rates environment, but housing starts and new mortgages have nevertheless materially deteriorated, now 29% and 43% below pre-pandemic levels, the bank pointed out.
JPM reckons softening consumer demand could be exacerbated if key competitor, Leroy Merlin, expands its increasingly promotional stance from Poland into France.
10:21am: PMI consistent with fall in GDP
Ruth Gregory at Capital Economics saiddespite edging higher the PMI is at a level that, historically, has been consistent with a contraction in real GDP.
"This supports our view that a mild recession is underway and that the Bank of England has finished hiking interest rates," she said.
The rise in the flash composite PMI was a bit weaker than expected with the improvement entirely due to a rise in the manufacturing output balance.
While this suggests the manufacturing sector may be over the worst it is still consistent with actual manufacturing output falling by around 1-2% a quarter.
"Overall, neither October’s PMIs nor today’s labour activity release contained anything too concerning for the Bank of England.," she felt.
"That gives us more confidence in our view that the Bank will keep rates on hold at 5.25% again next week."
9:59am: Unemployment rate rises to 4.2%
The UK labour market has held up slightly better than thought as higher interest rates weigh on economic activity, according to figures from the Office for National Statistics.
The ONS said the unemployment rate rose to 4.2% in the three months to August, up from 4% in the previous quarter.
The new adjusted Labour Market data published today show:
️▪️ employment was 75.7%
▪️ unemployment was 4.2%
▪️ economic inactivity was 20.9%
— Office for National Statistics (ONS) (@ONS) October 24, 2023
The employment rate fell 0.3 percentage points to 75.7% in the same period.
These estimates should be treated as “experimental”, the ONS said, as they were for the first time derived from tax records and benefits claims, rather than the labour force survey on which its figures are usually based.
The statistics agency was unable to publish the usual figures because of worsening problems with its survey.
9:50am: UK skirting with recession as business activity falls
Business activity decreased again across the UK private sector during October with lower output seen in both the manufacturing and service sectors.
At 48.6 in October, the headline seasonally adjusted S&P Global/CIPS Flash UK composite output index was up fractionally from 48.5 in September but below the 50.0 no-change mark for the third month running.
The latest reading signalled a modest reduction in private sector output, which contrasted with an upward trend on average during the first half of 2023.
UK business activity continued to decline in October, @SPGlobal @cipsnews #UK Flash #PMI data showed, with the PMI at 48.6 (Sep: 48.5) amid further contractions in both services and manufacturing. Read more: https://t.co/PDwenfNa4I pic.twitter.com/QhkHZlH0Ve
— S&P Global PMI™ (@SPGlobalPMI) October 24, 2023
Chris Williamson, chief business economist at S&P Global Market Intelligence said: “The UK economy continued to skirt with recession in October, as the increased cost of living, higher interest rates and falling exports were widely blamed on a third month of falling output.”
“The overall pace of decline remains only modest, signalling a mere 0.1% quarterly rate of GDP decline, but gloom about the outlook has intensified in the uncertain economic climate, boding ill for output in the coming months. A recession, albeit only mild at present, cannot be ruled out,” he added.
The flash UK services PMI business activity index fell to 49.2 in October from 49.3 in September, hitting a 9-month low while the flash UK manufacturing PMI rose to 45.2 from 44.3, a 3-month high.
Service providers reported subdued consumer confidence, the impact of elevated borrowing costs, and weak client demand across the real estate sector.
9:38am: CAB "dead money" until confidence rebuilt
The warning from CAB has rompted some scathing words from Liberum.
Analysts said the management's reputation "is in tatters."
"While we think the underlying business has a strong proposition with a large market, management's inability to foresee events and guide is a major concern," it said.
It estimates forecasts will be cut materially with 35-40% off consensus Ebitda for financial 2023.
"The stock will likely be dead money until confidence is rebuilt," it said.
Shares in the fintech floated in July to much fanfare so this warning will doubtless prompt some questions from investors.
9:28am: CAB plummets after warning
Shares in CAB Payments have plummeted more than 50% after it warned revenue would be 17% below previous guidance.
The firm said in recent weeks it has seen a number of changes to the market conditions in some of its key currency corridors, on top of the ongoing uncertainties surrounding the Naira, which are impacting both volumes and margins; most notably, the Central African franc and West African franc.
At the present time, these market conditions are compressing margins and reducing trading volume.
These challenges are recent but continuing, and coincide with the traditionally strong fourth quarter, it said, while it is unclear when and to what extent conditions in these markets may improve.
CAB now expects group revenue for 2023 to be at least 20% ahead of the prior year but around 17% below previously issued guidance.
9:04am: Reduced UK expectations weigh on Barclays despite profit beat
It was a mixed bag from Barclays but the City has marked the high street lender down with shares off around 6%.
Profit came in ahead of forecast due to a stronger than expected performance in its credit card arm, and lower than expected provisions but the lender also reduced its guidance for net interest margin in the UK.
Shore Capital’s Gary Greenwood described it as “a low-quality earnings beat primarily due to a better than expected impairment charge.”
He explained pre-tax profit of £1.89 billion was ahead of the £1.77 billion consensus reflecting positive variances on impairments (+£137 million), litigation and conduct charges (+£62 million) and other net income (+£1 million), partly offset by negative variances on total income (-£34 million) and operating costs (-£47 million).
But he noted UK net interest margin guidance has been moderated to between 3.05-3.10% from around 3.15% previously given changes to deposit pricing and mix.
But given Barclays UK net interest income accounts for around one quarter of total group income - lower than for its domestic UK peers - the impact of this change on overall Group income will be relatively small, he thinks.
He expects forecasts to edge lower.
He rates Barclays ‘buy’ and thinks it is the “most undervalued of the mainstream UK banks that we cover.”
Over at Jefferies, analysts don’t believe the UK NIM guide necessarily implies downgrades to profit forecasts given 10 basis points of UK NIM is worth around £200 million yet credit card revenue is annualising £284 million ahead of consensus in the quarter.
It pointed out EPS was 12% ahead of market expectations as card revenue and credit costs come in better than expected.
Jefferies keeps Barclays at buy.
Richard Hunter at interactive investor said: "As ever, Barclays is spinning many plates and largely reaping the reward of its geographical and business diversity."
"The lower NIM guidance in particular has been received extremely poorly by investors, whereas the drop in CIB income was largely expected given the recent experience of US banks."
8:47am: Miners up, banks down
It’s a two-way pull in London with miners in the green and banks in the red leaving the FTSE 100 broadly unchanged.
Banks remain unfavoured with Barclays down over 8% after its results today with Lloyds Banking Group PLC (LSE:LLOY) down 2.3% and NatWest down 3.5%.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “Despite beating expectations at a headline level, underneath it’s a real mixed set of results for Barclays, reflecting an increasingly challenging backdrop.”
But mining firms are faring better with Rio Tinto up 2.4%, Antofagasta up 2.0% and Anglo American up 1.5%.
Barclays has taken a more optimistic view of Rio Tinto, upgrading to overweight from equal weight, after a visit to China.
This showed steel and iron ore demand was more resilient than it thought.
Over in the FTSE 250, CAB Payments Holdings has plunged 57% after a trading update - we'll have more on this as the morning progresses.
8:15am: FTSE held back by weak banks after Barclays results
The FTSE 100 opened lower weighed down by falls in the banking sector after mixed results from high street lender, Barclays.
At 8:15am, London’s lead index was down 3.78 points at 7,371.05 while the FTSE 250 rose 28.03 points, 0.2%, at 17,087.02.
Barclays reported better-than-expected profits in the third quarter but lowered UK net interest margin guidance and flagged a charge in the fourth quarter due to restructuring.
Shore Capital’s Gary Greenwood described it as “a low-quality earnings beat primarily due to a better than expected impairment charge.”
He noted net interest margin guidance was downgraded again, given deposit pricing and mix changes, which could provide negative read across elsewhere.
Matt Britzman, equity analyst at Hargreaves Lansdown described it as “a mixed quarter for Barclays.”
“Higher rates are still providing a healthy tailwind, more than offsetting the impact of a weaker mortgage market and a shift in deposit levels.”
“But it well and truly looks like net interest margin has peaked for the UK arm, with full-year guidance pulled lower.”
Shares in Barclays fell 6.6% dragging Lloyds and NatWest down by 3.0% and 2.6% respectively.
Bunzl was another share in the red, down 4.1%, after it reported a fall in third quarter sales although it held guidance.
In the green was Rio Tinto, up 2.1%, after Barclays upgraded to overweight from equal weight.
7:58am: Bunzl backs guidance despite sales fall
We'e had a trading update from Bunzl PLC as well which reported revenue fell 8.8% in the third quarter as sales of Covid-related products continued to drop and it took a hit from the weakness of the pound.
However, full-year guidance for adjusted operating profit was maintained by the FTSE 100-listed group supplier of basic products for the grocery, hospitality, retail and healthcare industries, which said the performance was in line with its expectations.
7:48am: ScS agrees bid approach from Italy's Poltronesofà
ScS Group PLC (AIM:SCS) has agreed a £99.4 million bid approach from Poltronesofà SpA, the Italian furniture retailer.
The offer values each ScS share at 280p consisting of 270p per share cash and a 10p final dividend.
Alan Smith, non-executive chair of ScS, said: “This cash offer, which the ScS Board unanimously recommends, comes at an attractive valuation.”
“It recognises the quality of the ScS Group's operations, its cash resources, and the progress accomplished under Steve Carson's leadership via his refreshed strategy.”
Poltronesofà has 167 stores in Italy, 106 stores in France and 27 further stores across Europe (15 in Belgium, nine in Switzerland, two in Cyprus and one in Malta).
It said the deal follows a decision to continue its geographic growth and enter the UK sofa market.
7:33am: Barclays beats forecasts, flags cost cuts
Results from Barclays are in and it's a bit of a mixed bag.
The lender beat profit forecasts in the third quarter driven by a strong performance by its credit card business but flagged further actions may be needed to tackle costs.
Revenue in the bank’s corporate and investment bank missed expectations and Barclays reduced its outlook for net interest margin this year to between 3.05% and 3.1%, having already cut this guidance in July.
The FTSE 100 listed lender said pre-tax profit in the three months ended September fell 4% to £1.89 billion from £1.97 billion the year before, although this was ahead of the £1.77 billion consensus.
Income rose 5% to £6.26 billion from £5.95 billion, basic EPS fell to 8.3p from 9.4p while the return on total equity slipped to 11.0% from 12.5%.
CS Venkatakrishnan, chief executive, said: “We delivered an 11.0% RoTE in Q3, against a mixed market backdrop, as we continued to manage credit well, remained disciplined on costs and maintained a strong capital position, with a Common Equity Tier 1 ratio of 14.0%.”
“We see further opportunities to enhance returns for shareholders through cost efficiencies and disciplined capital allocation across the group.”
Corporate and Investment Bank income decreased 6% to £3.08 billion from £2.82 billion the year before, reflecting lower client activity in both Global Markets and Investment Banking fees.
Barclays UK income decreased 2% to £1.87 billion, driven by the impact from the transfer of Wealth Management & Investments to Consumer, Cards and Payments where income climbed 9% to £1.36 billion from £1.24 billion.
Group total operating expenses decreased 4% year-on-year to £3.9bn as inflation, business growth and investments were more than offset by efficiency savings and lower litigation and conduct charges, Barclays said.
Bad debt provision ticked up to £433 million from £381 million while the Teri 1 Capital Ratio improved to 14.0% from 13.9%.
Looking ahead, Barclays said it was targeting a cost: income ratio percentage in the low 60s in 2023 and is looking at actions to reduce structural which may result in material additional charges in the fourth quarter.
It is targeting a RoTE of greater than 10% in 2023 and expects the UK net interest margin (NIM) to be in the range of 3.05%-3.10% in 2023.
The NIM was 3.04% in the third quarter compared to 3.01% last year.
7:00am: FTSE 100 called lower, Barclays kicks off banking results
The FTSE 100 is expected to open lower on Tuesday ahead of unemployment figures and a batch of PMI releases.
Spread betting companies are calling London’s lead index down by around 10 points after closing down 27.31 points at 7,374.83 on Monday.
US bond yields fell after billionaire investor Bill Ackamn said he had ended his short call on US Treasuries saying “there is too much risk in the world to remain short bonds at current long-term rates’.
The fall boosted technology shares in the US although blue-chips fell further.
Back in London, and alongside the delayed unemployment figures, Barclays kicks off the banking reporting season providing the early focus.
Updates are also due from Anglo American, Bunzl and Softcat (LSE:SCT).