- FTSE 100 up 93 points at 7,504
- Retail sales fall 0.3% in October
- LSEG falls as financial targets disappoint
4.45pm: FTSE closes on high
London's blue-chip index charged over a hundred points higher but could not hold onto all its gains and finished up 1.2% at just over 7,504, its highest close since 18 October, as markets take in a fourth week of falling oil prices and rapidly declining global yields.
3:55pm: Aston Martin motors after F1 stake sale
Canadian billionaire Lawrence Stroll has sold a minority stake in the Aston Martin team to US private equity firm Arctos Partners.
The investment by Arctos, which has a stake in the Boston Red Sox and Liverpool Football Club owner Fenway Sports Group, values the F1 team at about £1 billion.
It is the first time Stroll has sold shares in the F1 team, which his son Lance drives for.
He is also the largest shareholder in Aston Martin Lagonda Global Holdings PLC (LSE:AML) (Aston Martin Lagonda Global Holdings PLC (LSE:AML)), the British luxury carmaker, which saw shares shoot up on Friday.
The sale of a minority stake of Aston Martin’s Formula One team marks another shift in investors attempting to tap into the hype surrounding the sport
F1 has experienced a surge of interest due to a concerted global push by owner Liberty Media Group, alongside the unexpected success of the Netflix series Drive to Survive.
3:52pm: Axel Springer pulls out of Telegraph bid - FT
The Financial Times are reporting that German publishing group Axel Springer has pulled out of an auction to buy Telegraph Media Group.
Axel Springer apparently baulked at the price expectations for the UK publisher, according to people with knowledge of the matter.
The FT report said: "The people said the mooted price tag of around £600mn was too high for an asset primarily rooted in print rather than digital distribution."
The Telegraph group is up for sale after being seized by Lloyds bank, in a row with owners the Barclays family in June over more than £1bn in unpaid debt.
3:16pm: BoE's Ramsden says rates need to remain restrictive
Bank of England deputy governor Sir Dave Ramsden has predicted that UK interest rates must remain at ‘restrictive’ levels for some time, to bring inflation down to the 2% target.
Ramsden is one of the six MPC members who voted to leave interest rates on hold at 5.25% this month (outvoting three who wanted a rise to 5.5%).
He told the Society of Professional Economists today that borrowing costs need to remain high, based on the BoE’s economic forecasts.
He said: "In terms of my latest monetary policy decision I voted along with five other MPC members to maintain Bank Rate at 5.25% at the November meeting."
"I continue to characterise my approach to monetary policy as being watchful and responsive. I will continue to monitor closely the indications of persistent inflationary pressures and resilience in the economy as a whole."
"On the basis of our latest projections a restrictive policy stance is likely to be warranted for an extended period of time to bring inflation sustainably back to the 2 per cent target."
2:45pm: US markets little changed, FTSE buoyant
US stocks edged lower in early trading with little new news to provide direction, while in London the FTSE 100 is at session highs.
Shortly after the opening bell, the Dow Jones Industrial Average was down 12.91 points at 34,932.56, the S&P 500 was down 2.30 points, 0.1%, at 4,505.94 and the Nasdaq Composite was down 27.95 points, 0.2%, at 14,085.72.
The rate of new home construction in the US increased in October, while single family home construction increased from a year ago despite higher mortgage rates.
Housing starts in October increased 1.9% from the previous month to a seasonally adjusted annualised rate of 1.37 million, the US commerce department said.
While single family housing starts only edged up 0.2% on a monthly basis, they are up 13.1% from a year ago.
Permits to build single family homes increased 0.5% from September and 13.9% from a year ago.
On a quieter day for company news, multinational pharmaceutical firm Eli Lilly said it plans to build a $2.5 billion high-tech manufacturing site in Alzey, in the German state of Rhineland-Palatinate.
The investment will further expand the company's global parenteral (injectable) product and device manufacturing network, it said.
Shares eased 0.2%.
Gap was a big mover with shares jumping 23% after the company posted better-than-expected results for the third quarter.
1:28pm: Chancellor likely to have some wiggle room next week
Looking ahead to next week's Autumn Statement and ING Economics thinks the chancellor Jeremy Hunt is likely to be gifted with a rare bit of good news as he gears up for his address on Wednesday.
Not only has borrowing come in £20 billion lower than forecast so far this fiscal year, but new projections from the Office for Budget Responsibility are likely to show that he has a little more wiggle room to play with, whilst still meeting his main fiscal goal of lowering debt as a share of GDP within five years.
This ‘wiggle room’ has added importance ahead of a likely general election in 2024 with the Conservative well behind in the polls.
ING reckons the chancellor will be landed with roughly £15 billion in “headroom” against his fiscal targets, which is an increase from the £6.5 billion available back in March.
This could rise by a further £6-7bn if the Bank of England cuts Bank Rate more aggressively than markets expect over the next couple of years.
What Hunt will so with an extra cash is a topic of hot debate with inheritance tax, ISA reforms and business taxes all in the frame for reform.
12:42pm: Ratcliffe close to $33 per share Man Utd deal
Sir Jim Ratcliffe and the Glazer family are on the brink of finalising a $33-a-share deal that will see the petrochemicals tycoon acquiring a 25% stake in Manchester United Football Club, according to reports.
Sky News said that after months of talks between the Ineos billionaire and the Red Devils' controlling investors for the last 18 years have settled on a price of roughly $33-a-share.
If confirmed, it would represent a premium of more than 75% to Thursday's New York Stock Exchange closing price of $18.43, which gave the Old Trafford club a market capitalisation of $3.04 billion (£2.44 billion).
12:02pm: US markets set for third week of gains in a row
Heading stateside, and US markets are expected to make steady early progress as an upbeat week nears its conclusion.
In pre-market trading, futures for the Dow Jones Industrial Average were up 0.2%, while those for the S&P 500 rose 0.2%, and contracts for the Nasdaq 100 futures were little changed.
All three averages are on pace for weekly gains, which would be the third straight positive week.
The S&P 500 and the Nasdaq are up more than 2% after Thursday’s close, while the Dow is on pace for a 1.9% rise.
Those gains were sparked by soft US inflation data that gave hope to investors that the worst of inflation, and interest rates hikes, were behind.
Stocks on the move include Gap, up 17% after strong results, while Applied Materials fell 7% as reports of a Justice Department investigation overshadowed overwise upbeat quarterly financial results.
11:22am: LSEG's lack of detail disappoints analysts
The capital markets event from the London Stock Exchange has received a fairly muted response from the City with one bank calling it a "missed opportunity".
Jefferies noted with its new medium-term targets, LSEG is clearly keen that the market should not obsess over specific numbers and instead focus on trajectory.
But Citi expects the initial financial targets to be seen as a missed opportunity, with LSEG unwilling to provide quantitative figures.
“The targets may therefore be met with modest disappointment, but we have always argued that the commentary provided at the main CMD is likely to be more important, as confidence in the Data & Analytics business proposition is what will ultimately drive a re-rating,” it continued.
Goldman Sachs (NYSE:GS) said dwelled on the partnership with Microsoft, saying no “notable revenue benefits” have been included at this stage in consensus estimates but that applications will begin to launch in the first half of 2024, with revenue impacts from 2025.
10:46am: Sage downgraded, Rolls-Royce target upped
Back to the FTSE 100 and broker comments have lifted Rolls-Royce Holdings PLC (LSE:RR.) but held back Sage Group PLC.
Rolls is up 1.2% after Deutsche Bank increased its price target to 310p from 210p ahead of the Capital Markets Day, the latest bullish commentary ahead of the event.
But Sage is down 0.7% and top of the FTSE 100 fallers and there are only three after Shore Capital downgraded the stock to hold from buy.
Results from the accountancy software provider are out next week.
The broker said it continues to believe Sage can unlock significant incremental equity value as it continues its transition to the Cloud, with encouraging signs visible in recent company updates, including success around new customer acquisition.
But it thinks the stock is largely “up with events and could struggle to find a fresh impetus to the upside in the near term,” and doesn’t expect a “material upgrade next week.”
10:03am: Babcock strengthened balance sheet offers attractions
Over to the FTSE 250 which is a touch under 200 points at 18,551.13.
Babcock International Group is a prominent riser, up 3.8%, after attracting an upgrade from Barclays.
The broker has moved to overweight from equal weight with a 529p price target.
"With Babcock's portfolio streamlining complete, a strengthened balance sheet, positive free cash flow, and a reinstated dividend, investors can now have more confidence in the company's ability to generate future cash returns," it said.
With the dividend now reinstated, "we view this as a strong signal to both visibility and confidence in the longer-term trajectory of cash generation," the broker added.
It thinks buyback activity should be a watch item for investors from financial year 2025.
9:38am: Rising gold price supports Fresnillo and Endeavour
The recent strength in the gold price is boosting share prices of Fresnillo and Endeavour Mining today.
The gold mining plays are both near the top of the FTSE 100 risers, advancing more than 2%.
The gold price has climbed 2.8% this week and is once again toying with $2,000 an ounce mark lifted by expectations that US interest rates have peaked which have put the dollar under pressure.
9:16am: NatWest named as Barclays preferred UK banking play, replacing Lloyds
NatWest Group PLC (LSE:NWG) is up 1.8% after Barclays upgraded the lender, making the bank its preferred pick among UK banks, replacing Lloyds Banking Group PLC (LSE:LLOY).
Barclays said it had upgraded NatWest on signs of slowing deposit migration, and now sees it as best placed to overcome term-funding risks.
It looks for a substantial rebound in net interest margin and earnings, ahead of consensus, driven by a best-in-class structural hedge tailwind.
“As well as now being 10% ahead of consensus 2024E PBT, we see NatWest as able to comfortably deliver a double-digit RoTE over the medium term, even in the unlikely event of sharp rate cuts or a significant re-acceleration in deposit migration,” it said.
Barclays remains positive on Lloyds, rated overweight and has raised its price target to 67p from 65p, but prefers the better NIM trajectory at NatWest, underpinned by its best-in-class structural hedge yield, which is set to comfortably overtake that of Lloyds.
Barclays has moved NatWest to overweight from equal weight with a 330p price target, well above today's 205p share price.
8:48am: LSEG financial targets a "missed opportunity"
The FTSE 100 has stormed ahead in early exchanges, now up 46 points at 7,457.
The drop in retail sales has pushed sterling lower as the market sees the numbers as backing the narrative that interest rates have peaked.
Leading the fallers is London Stock Exchange Group PLC (LSE:LSEG), down 1.2%, as it unveiled financial aspirations and a share buyback as its Capital Markets event moves into its second day.
Analysts at Citi expects the initial financial targets to be seen as a “missed opportunity,” with LSEG unwilling to provide quantitative figures.
“The targets may therefore be met with modest disappointment, but we have always argued that the commentary provided at the main CMD is likely to be more important, as confidence in the Data & Analytics business proposition is what will ultimately drive a re-rating,” it added.
AstraZeneca is up 1.5% after its favourable US ruling for a breast cancer treatment while NatWest is 1.6% to the good after an upgrade by Barclays to overweight.
Elsewhere, Sage Group is lower following a downgrade by Shore Capital to hold from buy.
8:15am: FTSE 100 shrugs off weak retail sales to push higher
The FTSE 100 opened higher despite a surprise fall in retail sales, which hit their lowest levels since the Covid lockdown of February 2021.
At 8:15am, London’s lead index was up 36.15 points, 0.5%, at 7,447.12 while the FTSE 250 was up 118.43 points, 0.7%, at 18,469.91.
Retail sales fell 0.3% in October month-on-month, hit by a drop in fuel sales, rising interest rates and the poor weather, coufounding expectations for a rise of 0.3%.
Samantha Phillips, partner at McKinsey & Co said “consumers held onto the purse strings in October,” in a “disappointing start to the golden quarter.”
She said it was “potentially also a sign of shoppers holding out for Black Friday bargains and other festive promotions.”
The EYITEM Club thinks the retail sector is in for a challenging time in the near-term, as the impact of higher interest rates weighs increasingly on disposable spending.
That said, the biggest driver of October’s fall in retail volumes was fuel sales, which may bounce back as recent falls in oil prices feed through to prices at the pumps, it thinks.
Gabriella Dickens at Pantheon Macroeconomics agreed that the fall could be short-lived.
“Looking ahead, we think a recovery in real incomes will cause retail sales to rebound,” she said.
Retail stocks shrugged aside the figure with Next, M&S and B&M European Value Retail all modestly higher.
Elsewhere, FirstGroup PLC (LSE:FGP) rose 3.9% after unveiling a new strategic partnership with Hitachi as part of the Group's bus fleet and infrastructure decarbonisation programme.
Analysts at Liberum said the deal supports FirstGroup’s transition to electric buses while giving it equity upside exposure to Hitachi’s commercial vehicle decarbonisation business.
7:57am: AstraZeneca nets US approval for breast cancer drug
Just before the mnarket opens, news from AstraZeneca PLC (LSE:AZN) which has secured US approval for a new breast cancer treatment, Truqap (capivasertib), to be used in combination with Faslodex (fulvestrant).
It brings hope for a specific group of sufferers: adult women with hormone receptor (HR)-positive, HER2-negative advanced or metastatic forms of the disease, who have specific genetic biomarkers (PIK3CA, AKT1, or PTEN).
This treatment is particularly for those who have seen their cancer progress after hormone-based therapies or within 12 months of completing adjuvant therapy.
7:53am: LSEG plans £1 billion buyback in 2024
One stock to keep an eye on today is London Stock Exchange Group PLC (LSE:LSEG) which has outlined plans to return £1 billion to shareholders in 2024 and said its agreement with Microsoft would help drive a step-up in revenue growth.
The company made the forecasts in a statement after the market close on Thursday, as it hosts a two-day Capital Markets event which kicked off on Thursday evening.
LSEG said for 2023 it remains on track to achieve guidance.
"We expect to deliver full year revenue growth towards the upper end of the 6-8% guidance range, with earnings before interest, tax, depreciation and amortisation margin also in line with guidance," the firm said.
It also issued new medium-term guidance, including a step-up in growth expectations.
LSEG now expects mid to high single digit organic revenue growth annually, accelerating after 2024 as customers start to benefit from the investment in platforms and the Microsoft partnership.
It predicts underlying Ebitda margin to increase over time and capital expenditure to decline to a high single digit percentage of revenue over time. Cumulative free cash flow is to exceed underlying profit after tax attributable to equity holders, it said.
The company reported strong progress with its Microsoft partnership with a new cloud environment build well advanced with early product enhancements and new applications to begin to launch in the first half of 2024. LSEG expects revenue to build from 2025.
Enhanced shareholder returns are also planned with GBP1 billion of buybacks to be executed during 2024 plus a progressive dividend policy. The company will target a dividend cover ratio of 2.5x-3.0x it said, with a split of approximately one-third/two-thirds between the interim and final dividends.
7:48am: Nationwide sees uptick in arrears, economy holding up
Nationwide has warned that mortgage arrears are rising as the UK’s third-largest mortgage lender reported on Friday that profits at were boosted by rising interest rates.
Encouragingly, Nationwide said economic activity, while still weak by historical standards, has held up better than expected, and there are signs that cost of living pressures are starting to ease.
The high street lender reported a slight rise in bad loans in its half-year results, with 0.38% per cent of its residential mortgages behind on repayments for more than three months at the end of September, compared with 0.32% at the start of April, as it warned that inflation, economic uncertainty and high borrowing costs remained “key risks”.
Statutory pre-tax profits increased to £989 million in the six months to September 30, up from £969 million the year before as higher interest rates boosted earnings.
Rising interest rates supported growth in total underlying income to £2.45 billion from £2.19 billion the year before, with the net interest margin up to 1.66% from 1.48%.
Credit impairment charges were lower at £54 million but arrears levels increased slightly, it said.
“Higher interest rates, continued inflationary pressures and the uncertain economic outlook remain key risks,” Nationwide said.
The building society said its balance sheet remains strong, with Tier 1 capital resources increasing by £0.6 billion, leading to a leverage ratio of 6.4% (above its target of at least 4.5%) and a CET1 ratio of 27.4%.
7:28am: Retail sales hit lowest levels since Covid lockdown
Retail sales have hit their lowest level since the February 2021 Covid lockdown, according to the Office for National Statistics (ONS).
The ONS said retail sales fell by 0.3% in October, following a fall of 1.1% in September (revised from a fall of 0.9%), confounding expectations for a rise of 0.3%.
Retail sales fell 0.3% in October 2023, following a fall of 1.1% in September.
When we look more broadly, sales fell 1.1% in the three months to October when compared with the previous three months.
— Office for National Statistics (ONS) (@ONS) November 17, 2023
Panmure Gordon's Simon French said it was a "tough set" of data with a challenging start to the fourth quarter with evidence of delayed seasonal spending, unseasonally warm weather & continued volume/value divergence.
For the three months to October, sales declined 1.1%, the ONS said..
Fuel sales fell by 2.0% in October which the ONS said may reflect increasing fuel prices while food sales fell by 0.3% in October from being unchanged in September.
Tough set of U.K. retail sales data for October. -0.3% MoM, following a revised -1.1% in September. Challenging start to Q4 with evidence of delayed seasonal spending, unseasonally warm weather & continued volume/value divergence. That latter spread should ease as producer input…
— Simon French (@shjfrench) November 17, 2023
Non-food stores sales volumes fell by 0.2% in October, following a 2.1% fall in September; retailers suggested that cost of living, reduced footfall and the wet weather in the second half of the month contributed to the fall, the ONS said.
Non-store retailing (predominantly online retailers) sales volumes rose by 0.8% in October following a fall of 2.4% in September.
7:21am: Marstons names new CEO; trading in line
Marston's PLC has named a new chief executive after the present incumbent Andrew Andrea agreed with the board that he will step down after more than 20 years at the firm.
Andrea will be replaced by Justin Platt who will join with effect from 10 January 2024.
William Rucker, chair, will support the management transition in the short interim period with the executive team reporting directly into him.
Platt has over 30 years' experience in hospitality and consumer-facing businesses, having spent the last 12 years at Merlin Entertainments (AIM:MERL); most recently as Chief Strategy Officer and prior to that in a variety of operational leadership roles.
The pub operator said current trading remains in line with management expectations
Andrea said: “This is the right time for me to step down and I am confident the business is in great shape with strong future potential.”
7:00am: FTSE 100 expected to open higher
The FTSE 100 is expected to open higher on Friday ahead of retail figures which are expecte to show modest growth.
Spread betting companies are calling London's lead index up by around 16 points after closing 75.94 points, 1.0%, at 7,410.97 on Thursday.
Retail sales are expected to have grown 0.3% growth on a monthly basis, compared to a 0.9% decline in September, when figures are released.
In New York, Wall Street closed little changed with the Dow Jones Industrial Average down 0.1%, the S&P 500 up 0.1% and the Nasdaq Composite up 0.1%.
Back in London, and with the corporate diary looking fairly quiet, London Stock Exchange Group will attract early attention as its Capital Markets Day event moves into its second day.
After the London close Thursday, the firm unveiled plans for a £1 billion share buyback in 2024 alongside expectations for higher growth.