- FTSE 100 down 7 points at 7.497
- Ashtead slumps on profit warning
- OpenAI founder Sam Altman joins Microsoft
4:40pm: FTSE 100 ends little changed
The FTSE closed little changed in a subdued session as investors look ahead to the FOMC minutes on Tuesday and the Autumn Statement on Wednesday.
At the close, London's blue-chip index was down 7.89 points, 0.1%, at 7,496.36 while the FTSE 250 closed up 31.18 points, 0.2%, at 18,599.05.
Leading the risers was Diploma PLC (LSE:DPLM), up 12%, as analysts pencilled in upgrades following better-than-expected full-year results.
"The Group is now much more resilient and well diversified given its expansion into attractive end markets, which are backed by long-term structural growth drivers," said analysts at Shore Capital.
The rise in the price suppported Shell and BP - on Friday after the London close reports in the FT and Reuters suggested Opec+ was considering extedning or increasing production cuts in 2024.
But Ashtead, down 10%, was freindless after it warned sales and profits would be lower than market expectations blaming fewer weather 'events' and the prolonged strike in Hollywood.
musicMagpie jumped after it received two bid approaches - including one from BT - while Currys, up 2.6% was boosted by an upgrade by RBC Capital Markets.
3:52pm: Citigroup jobs to go as restucturing continues
Back to the US and Bloomberg is reporting Citigroup is eliminating more than 300 senior manager roles as part of chief executive officer Jane Fraser’s efforts to simplify the Wall Street giant.
The Wall Street bank issued a statement confirming staff had been informed of the next phase of organisational changes but gave no details on the numbers of those affected.
"Today we shared with our colleagues the next layer of changes across many of our businesses and functions as we continue to align Citi’s organizational structure with our new, simplified operating model," it said.
"As we’ve acknowledged, the actions we’re taking to reorganize the firm involve some difficult, consequential decisions, but we believe they are the right steps to align our structure with our strategy."
3:16pm: Bank of America upbeat on LSEG after confident CMD
Shares in London Stock Exchange Group PLC (LSE:LSEG) have climbed 0.8% as the City reflects on the Capital Markets Event last week.
Bank of America felt it was a "confident" presentation amd has increased its price target to 10,500p from 10,000p.
It thinks LSEG will benefit from strong secular demand for data including new technologies like AI plus growth is enhanced by the partnership with Microsoft.
"While LSE's mid-term guidance for mid-to-high single digit organic annual revenue growth and margin expansion is in-line with our forecasts we believe they are underpinned by its broad offering in data & analytics (D&A) through workflows, data feeds and analytics," the broker commented.
It sees potential for higher back-end loaded growth through re-pricing, new products, and customer consolidation, BofA said.
It also feels LSEG's approximate 20% valuation discount at versus global data peers does not reflect an expected 13-14% EPS compund annual growth rate which is supported by strong recurring revenues (72% of total).
2:47pm: Nasdaq in fine fettle with Microsoft on the rise
The Nasdaq lead US stocks higher with the fall-out from Sam Altman's departure from OpenAI continuing to doiminate the business world.
Shortly after the opening bell. the Dow Jones Industrial Average was up 26.94 points, 0.1%, at 34,974.22, the S&P 500 was up 5.16 points, 0.1%, at up 4,519.18 and the Nasdaq Composite was up 64.23 points, 0.5%, at 14,189.71.
Microsoft jumped 1.7% after announcing it had hired the OpenAI founder, Sam Altman, to head a new AI research team with speculation others could follow.
Elsewhere, Bloomberg reported Citigroup is eliminating more than 300 senior manager roles as part of chief executive officer Jane Fraser’s efforts to simplify the Wall Street giant.
The Wall Street bank issued a statement confirming staff had been informed of the next phase of organisational changes but gave no details on the numbers of those affected.
"Today we shared with our colleagues the next layer of changes across many of our businesses and functions as we continue to align Citi’s organizational structure with our new, simplified operating model," it said.
"As we’ve acknowledged, the actions we’re taking to reorganize the firm involve some difficult, consequential decisions, but we believe they are the right steps to align our structure with our strategy.
2:15pm: OpenAI staff revolt over Altman departure
Across to the US, and the staff of OpenAI are in open revolt over the shock departure of Sam Altman.
Around 500 staff have signed a letter threatening to leave unless the board resigns and reinstates Sam Altman as CEO, along with cofounder and former president Greg Brockman.
The letter says OpenAI has pushed the field of artificial intelligence to new frontiers, but warned: "The process through which you terminated Sam Altman and removed Greg Brockman from the board has jeopardized all of this work and undermined our mission and company."
Breaking: 505 of 700 employees @OpenAI tell the board to resign. pic.twitter.com/M4D0RX3Q7a
— Kara Swisher (@karaswisher) November 20, 2023
"Your conduct has made it clear you did not have the competence to oversee OpenAI.”
1.28pm: Here’s a quick look at the risers and fallers on the junior market today
musicMagpie plc, the electronic devices rebuyer, jumped by a third in market value after it confirmed BT Group PLC (LSE:BT.A) and private equity firm Aurelius Group have expressed interest in a takeover of the company.
Phoenix Copper Ltd (AIM:PXC, OTCQX:PXCLF) has announced the initial term of its US$2 million (£1.6 million) short-term loan facility has been extended, sending shares in the firm higher on Monday morning. Shares in the AIM-listed firm jumped 18.4% 27.24p.
Shares of RUA Life Sciences (AIM:RUA) surged 38% following a promising update on its business operations alongside the news that it is looking for non-dilutive sources of funding.
Oriole Resources PLC (AIM:ORR) led the charge in the small-cap mining sector on Monday after announcing a non-binding heads of terms (HoT) agreement with BCM International, a renowned mining and civil contractor based in Ghana. Shares rocketed up 87% to 0.19p following the announcement.
Shares in Velocys PLC (AIM:VLS), which is developing sustainable fuels for the aviation industry, saw its shares nosedive 60% after it updated on funding negotiations which included an offer to buy the entire business for a significant discount to the current valuation.
1:02pm: Goldman predicts modest tax cuts in Autumn Statement
Goldman Sachs (NYSE:GS) expects the Autumn Statement to see the government’s headroom against the fiscal mandate rise to around £25 billion before new policy measures, a meaningful increase since the Spring Budget, as higher tax receipts outweigh increased interest expenses.
Goldman explained borrowing has come in roughly £20 billion below the OBR’s March forecast in the first six months of fiscal year 2023 predominantly driven by higher tax receipts with income tax, VAT, and corporation tax receipts all exceeding expectations.
Source: Goldman Sachs (NYSE:GS)
As a result, the investment bank expects that the government will use this additional headroom to make modest tax reductions totalling up to around £10 billion
Measures that the government could consider include a reduction in inheritance tax, an extension of the full expensing capital allowances regime, or a cut in stamp duty.
But Goldman thinks that larger tax cuts are less likely at next week’s statement, because a more substantial fiscal loosening would risk raising inflation and interest rates.
Instead, it expects the government to conserve the majority of its headroom for the Spring Budget.
“We view reductions in income tax as less likely at next week's statement, given the risk of raising inflation, although it could be that the government commits to reducing income tax rates or raising thresholds at a future date,” it said.
12:30pm: Halfords and Redde Northgate fail to agree merger - report
Van rental outfit Redde Northgate has made a £1.4 billion merger approach for the high street bike and car repair chain Halfords, according to the Telegraph.
It is understood that the pair have held detailed talks about a possible tie-up after Redde Northgate, which owns 130,000 vans and corporate cars in the UK and Spain, made a firm proposal to Halfords.
A City source said Redde Northgate had proposed a nil-premium merger, but the discussions were abandoned because of disagreements over price, the report said.
The Halfords board is thought to have concluded that any such deal on the terms laid out would have undervalued the company.
However, it is believed that Redde Northgate could mount a fresh bid if the valuation gap between the two sides closes, the report.
Shares in Halfords were trading 1% lower on Monday while Redde Northgate were trading 1.4% lower.
12:05pm: Flat start expected in the US
US markets are expected to make a subdued start as Wall Street starts the shortened Thanksgiving holiday week.
In pre-market trading, futures for the Dow Jones Industrial Average were flat, while those for the S&P 500 were little changed, and contracts for the Nasdaq 100 futures rose 0.1%.
Joshua Mahoney at Scope Markets noted it is a “quiet day ahead in terms of economic data with only a very limited number of releases expected, although earnings news is set to offer a little more with Zoom set to report after the close.”
Elsewhere, Microsoft shares were up 1.7% in pre-market trading after CEO Satya Nadella said former OpenAi chief Sam Altman will be joining the tech giant to lead a new AI research team.
We remain committed to our partnership with OpenAI and have confidence in our product roadmap, our ability to continue to innovate with everything we announced at Microsoft Ignite, and in continuing to support our customers and partners. We look forward to getting to know Emmett…
— Satya Nadella (@satyanadella) November 20, 2023
"We’re extremely excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team. We look forward to moving quickly to provide them with the resources needed for their success." Nadella said.
Otherwise, Tuesday sees the publication of the minutes from the latest Federal Reserve policy meeting, plus results from Nvidia.
11:33am: Prime Minister Sunak says taxes can be cut over time
UK prime minister Rishi Sunak has declared he believes in cutting taxes “carefully and sustainably”, in a speech ahead of Wednesday’s Autumn Statement.
The PM said this was possible given the cooler inflation figures which last week showed a fall to 4.6%.
The Chancellor will DEFINITELY cut personal income taxes on Wednesday, income tax or national insurance. If he doesn’t the PM will look incredibly foolish for saying this morning, repeatedly, that the moment has come to start cutting taxes, because he knows most voters don’t see… pic.twitter.com/v4pzDInPs4
— Robert Peston (@Peston) November 20, 2023
Sunak said the cuts to tax would be done “in a serious, responsible way, based on fiscal rules to deliver sound money, and alongside the independent forecasts of the Office of Budget Responsibility.”
“And we can’t do everything all at once. It will take discipline and we need to prioritise.”
“But over time, we can and we will cut taxes.”
11:19am: Currys becoming investable again, says RBC
Another stock benefiting from some upbeat broker comment is Currys PLC (LSE:CURY), with shares up 2.3% at 49.46p.
RBC Capital Markets has upgraded the stock to outperform from neutral and increased its price target to 70p from 60p.
It pointed out Currys' financial leverage and travails in the Nordic region have left it firmly in the investor "no-fly zone" in recent years.
But its proposed disposal of Kotsovolos in Greece will leave it with a net cash position.
Plus, it retains a strong relative market position in a sector ripe for consolidation, and its valuation looks very undemanding.
10:47am: StanChart to outperform peers - Goldman
Standard Chartered PLC (LSE:STAN) is set to show a rare out-performance relative to its bank peers over the next two years, according to Goldman Sachs (NYSE:GS).
The US investment bank expects the bank to print a double-digit EPS compound annual growth rate (CAGR) and show around a 2.7 percentage point return on equity (ROE) improvement vs a low single-digit EPS CAGR and declining ROE at peer banks.
Goldman sees four drivers of this out-of-cycle EPS/ROE improvement.
It sees an unwind of loss-making hedges put-on by the group during late 2021, which are acting as a c.20 basis point drag on group net interest margins (NIM), starting in February 2024.
This benefit, as hedges are rolled over, would come as peers report flat-to-declining NIMs over the next two years on policy rate cuts.
Goldman also highlighted a brighter non-funds income outlook as continued share gains in its fund management are no longer suppressed by declining volatility.
It also suggested the new CFO could focus on the out-sized corporate office/HQ function relative to its peers, which has been the main source of historical ROA under-delivery vs peers.
Finally, capital now at top-end of the target range, with slow balance sheet growth ahead, could translate into continued buy-backs which would reduce share count at 6% p.a.
Upgrading to buy from neutral, Goldman pointed out the stock trades at close to record-low valuations compared to a near decade-high ROTE of 11% next year.
It has price target of 868p, down slightly from 879p, implying 38% potential upside on top of 3% dividend yield.
Shares are up 0.6% at 664p.
10:07am: Foxtons (LSE:FOXT) jumps as shareholders push for sale - report
Shares in Foxtons (LSE:FOXT) have jumped 7.2% to 43.40p after a report suggested shareholders are pushing for a sale of the business.
Milkwood Capital, an investment fund that specialises in investing in undervalued companies over the long term, owns about 4% and is the latest shareholder to demand a sale of the estate agency, according to The Times.
Rhys Summerton, who runs Milkwood Capital, said: “If you look back, in 2015 Foxtons (LSE:FOXT) was a £1 billion company. But the public markets are no longer valuing the good work the management has done recently and the only way to extract fair value is for the board to carry out a sale process.”
His statement follows pressure from the Canadian investor Converium Capital, which has been lobbying for Foxtons (LSE:FOXT) to carry out a strategic review over the past 18 months.
Converium Capital owns around 6% of the firm.
9:47am: Capita boosted by £239 million contract win
Capita PLC (LSE:CPI) is in demand with shares up 4.1% after it secured a new contract to manage the Civil Service Pension Scheme for the Cabinet Office.
The 10-year deal which kicks off from September 2025 is worth £239 million, the company said in a statement.
The outsourcer explained the CSPS is one of the largest public sector pension schemes in the UK.
9:31am: Ashtead knocked by Hollywood strike and calm weather
Ashtead remains top of the FTSE 100 fallers – and by some margin – with shares down 12% after today’s profit warning.
Analysts at Liberum noted the warning is likely to mean Ebitda estimates for financial 2024 fall by around 2%, with pre-tax profit forecasts moving around 8% due to higher than expected depreciation and interest charges.
But it pointed out the two headline reasons for the revision - little emergency response work this year and the US writers' and actors' strikes lasting longer than expected - seem one-off in nature.
“We would look to buy on weakness as long term drivers are still intact (notably moves from owning to renting, mega-projects and industry consolidation),” it said.
9:10am: Compass buyback disappoints
Shares in Compass Group PLC (LSE:CPG) are 4.8% lower following full-year results today.
EPS came in a touch below forecasts while the share buy-back also disappointed, according to analysts.
Jefferies said EPS was 1% below consensus with a higher tax charge “offsetting better fourth quarter organic revenue growth and a modest margin beat.”
But it said the $500 million buyback was at the bottom end of expectations.
The broker thinks consensus EPS estimates are likely to decrease by low single digits due to higher tax and interest.
8:44am: FTSE 100 on the back foot
It remains a subdued start in London this Monday morning with the FTSE 100 now down 21 points at 7,483.
Susannah Streeter at Hargreaves Lansdown said there doesn’t “seem much motivation on Monday to reverse early losses on the FTSE 100.“
“It’s been on the back foot in early trade, despite a close in the green for Wall Street on Friday.”
She suggested the slight tick up in sterling may be part of the equation, “given the effect on dollar denominated earnings of the raft of multinationals listed on the index.”
Leading the risers, is Diploma. Up 4.9%, after strong full-year results which saw revenue jump 19% and adjusted operating profits rise 24%.
Analysts at Shore Capital said the overall, the group has performed strongly, beating company complied consensus on an earnings basis by c.3%, noting the stronger than expected operating margin performance.
It expects to increase its adjusted pre-tax profit by around 4% to £244 million and sees consensus rising by a similar amount.
Standard Chartered rose 1.0% as Goldman Sachs (NYSE:GS) upgraded to buy from neutral, but Ashtead remains out of favour, down 15%.
8:15am: FTSE 100 opens lower while Ashtead plummets
The FTSE 100 has opened modestly lower, after Friday’s bumper gains, with investors already casting one eye to Wednesday’s Autumn Statement.
At 8:15am, London’s blue-chip index was down 22.68 points, 0.3%, at 7,481.57 while the FTSE 250 was little changed at 18,569.33.
Ashtead tumbled 14% after warning of lower sales and revenues due to fewer hurricanes and other weather events plus the actors and writers strike in North America running on longer than expected.
Peel Hunt expects a 8-10% reduction in the pre-tax profit consensus.
Compass also fell, down 5%, despite strong growth in profits and a new share buyback.
Richard Hunter at interactive investor said the fall followed a disappointing revenue miss to expectations.
Elsewhere, musicMagpie jumped 33% after revealing bid approaches from BT and Aurelius, while Currys jumped 3.8% as RBC Markets upgraded to outperform.
7:54am: Compass launches fresh buyback as profits surge
Compass Group PLC (LSE:CPG) will also be in the spotlight after announcing plans to return surplus cash through a further share buyback of up to $500 million.
The contract caterer made the announcement alongside full-year results which showed underlying operating profit growth of 30% to £2.12 billion and organic revenue growth of 19%, to £31.3 billion, balanced across all regions and sectors.
Operating margin of 6.8%, were up 60bps year on year, the firm said.
Looking ahead, Compass has forecast underlying operating profit growth towards 13% delivered through high single-digit organic revenue growth and ongoing margin progression.
Dominic Blakemore, group chief executive, said:”Going forward, we expect to sustain mid to high single-digit organic revenue growth and ongoing margin progression leading to profit growth ahead of revenue growth and increased cash generation.”
7:45am: musicMagpie getts bid approaches from BT and Aurelius
One stock that could be heading upwards is musicMagpie PLC which has confirmed it is holding talks with both BT Group PLC (LSE:BT.A) and Aurelius Group over a possible bid for the firm.
Responding to press speculation, the online seller of second-hand electrical goods said talks with both parties were at an “early-stage” and are ongoing.
It said there can be no certainty that any offer will be made and advised shareholders take no action at this time.
The deadlines for bids to be made is December 18.
7:32am: LSEG names new CFO
A new CFO for London Stock Exchange Group PLC (LSE:LSEG) which has appointed Michel-Alain Proch to the job.
Reporting to chief executive David Schwimmer, Proch will join LSEG on 26 February 2024 before joining the Board as CFO on 1 March 2024.
Following publication of the group's 2023 full year annual results on 29 February Anna Manz will step down from the board and leave the group.
Proch is currently chief financial officer for Publicis Groupe and prior to this, held several listed company CFO positions, notably at Ingenico and Atos, where he was also CEO, North America and group chief digital officer.
7:23am: Ashtead warns of lower profit and sales
Ashtead could be set for a rocky start when trading opens.
The company has warned sales and profit will be below current market expectations after a quieter hurricane season and writers’ and actors’ strike persisting longer than expected.
The international equipment rental company now expects both group and US rental revenue growth in the range of 11 to 13% (previous guidance for both: 13 to 16%), which will result in Ebitda being 2 to 3% below current market expectations.
In addition, it expects a full-year depreciation charge of around $2.12 billion and a net interest cost of $540 million which will result in adjusted profit before tax being below current market expectations.
Capital expenditure guidance remains unchanged at $3.9 to $4.3bn, it said.
Ashtead still expects to report expects to report record results for the half year and the second quarter with group rental revenue growth for the half year of 13%, Ebitda growth of 15% to around $2.58 billion and adjusted pre-tax profit growth of 5% to around $1.31 billion.
The firm said revenue late in the second quarter was affected by lower levels of emergency response activity with a significantly quieter hurricane season than seen in recent years and fewer naturally occurring events, such as wildfires, with this effect continuing into the third quarter.
In addition, the well covered writers' and actors' strikes, which has hit its Film & TV business in Canada significantly, persisted for longer than anticipated with some impact on the rest of the Canadian, US and UK businesses that rent into that space.
This has also continued into third quarter, it said.
7:05am: Blue-chips expected to open lower
Stocks in London are expected to open slightly lower as investors look ahead to the Autumn Statement on Wednesday.
Spread betting companies are calling the FTSE 100 down by around 10 points after closing up 93.28 points, 1.3%, at 7,504.25 on Friday.
The Prime Minister Rishi Sunak is expected to use a speech to paint a more upbeat picture of the UK economy ahead of the autumn statement.
Speculation is rife at to what the statement on Wednesday might contain with a reported move to cut inheritance tax now not expected to go ahead.
Elsewhere, oil prices have risen following reports that Saudi Arabia is preparing to prolong oil production cuts into next year as Opec+ weighs further reductions in response to falling prices and rising anger over the Israel-Hamas war.
Back in London, and the early focus will be update from contract caterer Compass and technical products and services supplier Diploma.