- FTSE 100 down 38 points
- Gold above US$2,700
- Retail sales slow
4.01pm: Blue chips close week higher despite Friday fall
A late-afternoon recovery was not enough to bring the FTSE 100 blue-chip index above the line this Friday.
In the final 30 minutes, it was trading at 8,347, or 38 points below yesterday’s closing price
The index touched an intraday low of 8,316 earlier this afternoon, dragged by all major housebuilding stocks, British American Tobacco PLC (LSE:BATS), DS Smith and plc Next plc.
Vistry, Barratt, Taylor Wimpey and Persimmon all fell in the low single digits due to rumours of a cut to stamp duty exemptions being primed for the upcoming Autumn Budget.
Big-cap miners managed to offset today’s losses with Fresnillo, Anglo American, Glencore, Antofagasta and Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) shooting to the top of the movers list.
Despite a sluggish Friday, the FTSE 100 closed over a percentage point higher from the beginning of the week.
3.19pm: Investigation opened into Tesla self-driving technology
The National Highway Traffic Safety Administration (NHTSA) in the US has launched an investigation into Tesla’s Full Self-Driving (FSD) feature following multiple accidents.
The investigation covers four incidents, including one fatality involving a pedestrian and another accident that resulted in an injury.
The NHTSA noted that in each case, the Tesla vehicles using the FSD system encountered reduced roadway visibility, such as sun glare or fog.
The FSD feature is sold as an $8,000 option and requires drivers to remain attentive and ready to intervene.
According to the recall notice, "The FSD Beta system may allow the vehicle to act unsafe around intersections."
The news could spark concern that Tesla's newly unveiled FSD 'Cybercab' vehicle will require significant improvements before coming to market in the following years.
2.51am: Netflix leads US markets higher
The Nasdaq 100 climbed more than 100 points in opening trades, adding more than half a percentage point to the tech-focused index.
Microchip stocks led the charge after TSMC’s revenue beat added some renewed optimism into the sector.
Arm Holdings PLC (NASDAQ:ARM), Broadcom Inc (NASDAQ:AVGO, ETR:1YD) and Micron Technology Inc (NASDAQ:MU) all added low single digits, while Nvidia Corp added 0.9%.
The Dow Jones Industrial Average went the other way, sliding 0.4%, while the broader S&P 500 index added 0.2%.
Netflix Inc (NASDAQ:NFLX, ETR:NFC) soared nearly 8% following yesterday’s impressive third-quarter revenue beat.
On the other hand, American Express Company (NYSE:AXP, ETR:AEC1), which just published its own third-quarter results, fell around 5%.
This is despite topping estimates and raising full-year guidance.
Back in London, the FTSE 100 index is struggling at an intraday low of 8,325.
2.31pm: Mortgage rates pick up after NatWest, Lloyds, Barclays hikes
Mortgage rates across the UK have steadily climbed this week as several major lenders upped prices following a run of reductions in recent months.
According to Moneyfacts, average two-year fixed mortgage rates increased every day this week.
This took the rate on a typical two-year fix from just below 5.37% on Monday to 5.41% as of Friday.
NatWest Group PLC (LSE:NWG), Barclays PLC (LSE:BARC) and Lloyds Banking Group PLC (LSE:LLOY)’s Halifax were among major lenders to push up rates over the week, despite signs of further cuts to base interest ahead.
Money markets are expecting the Bank of England’s first cut in August to be followed by two more reductions before the year-end following a below-anticipated inflation reading earlier this week.
Rohit Kohli, director at broker The Mortgage Stop, had said big lenders were "looking to protect their profit margins" by raising rates over the week.
Following moves from these three giant lenders, he said it was "a surprise move" but "other lenders may soon follow".
1.50pm: Housebuilders fall on stamp duty exemption cut talk
Housebuilders sat among the FTSE 100’s biggest losers on Friday as speculation built over a cut to stamp duty exemptions in the upcoming Autumn Budget.
Home buyers will be left paying up to an additional £2,500 in stamp duty as a result of the move to let a temporary hike in the exemption threshold end in March.
This had seen the nil-rate threshold for first time buyers increased from £300,000 to £450,000 under former prime minister Liz Truss, and from £125,000 to £250,000 for movers.
However, according to The Times, chancellor Rachel Reeves will not extend the scheme, meaning buyers will go back to paying stamp duty based on the original thresholds.
Some £1.8 billion is expected to be raised by 2030 through the move, which will reportedly be firmed up in the October 30 Budget.
Taylor Wimpey PLC (LSE:TW.) sat among the day’s leading fallers on Friday following the report, down 2.2%, ahead of the likes of Persimmon PLC (LSE:PSN), Barratt Redrow PLC (LSE:BTRW) and Vistry Group PLC (LSE:VTY).
1.04pm: Mike Ashley’s Frasers not done with Mulberry bid yet
Mike Ashley’s Frasers Group PLC (LSE:FRAS) was snubbed in its attempt to secure a controlling stake in British luxury brand Mulberry Group (AIM:MUL) plc, but it appears that there is still some flight left in the FTSE 100-listed Sports Direct owner.
Mulberry rejected Frasers’ offer to acquire the business in September at an £83 million valuation, stating that the bid “does not recognise the company's substantial future potential value”.
Frasers, which already owns more than a third of Mulberry’s outstanding shares, launched the bid in retaliation to majority shareholder Challice’s agreement to enter into a £10 million dilutive equity round in Mulberry.
Mike Ashley’s retail giant reignited the takeover campaign today, stating that its proposals “should be given due and proper consideration”.
“Frasers notes that it is still yet to receive formal feedback from the board of Mulberry on the revised proposal (only 150p per share), the group added.
Frasers said “has sought to engage with Challice directly”, presumably to mete out an attractive-enough offer for Challice to sell its majority stake.
That is despite, as Frasers today acknowledged, “Challice has no interest in either selling its Mulberry shares to Frasers or providing Frasers with any irrevocable or other undertaking with regards the possible offer”.
Godspeed, Ashley.
12.50pm: Peel Hunt downgrades boohoo
It is hardly a surprise that broker Peel Hunt has opted to downgrade boohoo’s share price target considering the barrage of bothersome news emerging from the online fashion retailer today.
Alongside a strategic review into its operations that could culminate with a break up of the group, boohoo announced that its chief executive John Lyttle will be jumping ship after five years.
Boohoo also unveiled a £222 million debt refinancing, which in fairness Peel Hunt said “highlights the company’s balance sheet stability”.
What’s undeniable is that sales are lagging- total revenue in the first half of boohoo’s current financial year declined 15% year on year, while gross merchandise value (GMV) slipped 7%.
Peel Hunt said “that is in keeping with expectations, if not market forecasts, following similar trading patterns at ASOS over the summer”.
Adjusted earnings of £21 million, however, drastically undershot the broker’s assumptions of between £28-£30 million.
For analysts, boohoo needs to focus on “the relevance of the younger fashion brands” like PrettyLittleThing. In contrast, Debenhams and Karen Miller “continue to perform well”, according to Peel Hunt.
Following Lyttle’s departure, Peel Hunt sees Debenhams chief executive Dan Finley as the ideal successor, “but either way, we see some heavy lifting required to inject growth back into boohoo”.
Peel Hunt placed a ‘hold’ rating on boohoo stock (following an ‘under review’ period) with a 35p price target.
Shares are down 8% today.
12.13pm: Nasdaq on course to jump in positive start on Wall Street
Wall Street looked on course for a positive start on Friday as traders mulled another busy day of company updates.
Futures had the Nasdaq up 77 points ahead of the opening bell, while the Dow Jones and S&P 500 were seen 11 and 9 points higher respectively.
American Express Company (NYSE:AXP, ETR:AEC1) and Schlumberger NV (NYSE:SLB) were among those to report on their third-quarter performances early on, with shares in each climbing by over 2% in pre-market trading respectively.
American Express reported an 8% increase in total revenues net of interest expense to US$16.64 billion, while diluted earnings per share climbed by 6% to US$3.49.
Schlumberger’s report showed revenue climbed by 10% to US$9.16 billion, with diluted earnings per share up 6% at US$0.83.
Procter & Gamble Co (NYSE:PG, ETR:PRG) shares were flat in the meantime as its first-quarter results showed a 1% drop in revenue to US$21.7 billion and 12% fall in diluted earnings per share to US$1.61.
Elsewhere, Netflix Inc (NASDAQ:NFLX, ETR:NFC) shares were up more than 6% in pre-market trading after the streaming firm posted expectation-beating results on Thursday.
Revenue of US$9.83 billion outdid expectations for US$9.77 billion, while per-share earnings of US$5.40 also outdid anticipations for US$5.12
This came on the back of a 35% jump in ad-tier memberships between the second and third quarters.
11.50am: Pound at two-year high versus euro after ECB cut
The pound jumped to a two-year high against the euro on Friday as traders weighed retail figures from the UK after the European Central Bank’s (ECB) latest interest rate cut.
A gain of 0.3% early on saw the pound hit its highest against the euro since April 2022 as the latter fell below the 83p mark.
This came after the ECB cut base interest for the second meeting in a row to 3.25% on Thursday, before Friday’s retail sales figures pointed to strength within the UK economy.
Though sales growth slowed to 0.3% in September, against August’s 1.0% growth, analysts had expected a decline.
11.24am: Record number of companies in ‘significant financial distress’ pre-Budget
The number of companies in “significant financial distress” hit a record over the third quarter of this year, according to restructuring firm Begbies Traynor (AIM:BEG).
Some 632,756 firms were said to be fighting for survival in the third quarter, marking a 32% against the same period a year earlier.
This came as a 19.3% increase in “significant” distress was seen across utilities over the quarter, followed by a 10.4% uptick among food and drug retailers, 9.9% for financial services and 8.7% in the bar and restaurant sector.
Those in “critical” financial distress fell over the quarter meanwhile, by 17%, signalling fewer firms were on the verge of insolvency.
“No section of the country’s economy is immune from the legacy debt built up by many businesses during the pandemic,” Begbies Traynor (AIM:BEG) partner Julie Palmer said.
“It is also apparent that the toxic effect of high inflation is still filtering down to businesses.”
She added high material and labour costs had hit the construction sector particularly hard, leaving the trend likely to continue and feed through to sub-contractors.
“For some, the prospect of a change of government was viewed as a potential catalyst for a much-needed economic boost,” Palmer continued.
“But, there are significant concerns surrounding what the next Budget might hold for the economy and the knock-on effect could be damaging for many businesses teetering on the edge of collapse, as it seems certain many will have to deal with higher employee-related taxes.”
11.01am: ‘Starting gun’ fired on ‘break up of Boohoo’ - analyst
Boohoo Group PLC (AIM:BOO) appears to be on the verge of breaking up its business after announcing a new review on Friday.
Following the announcement of the review, which was coupled with news chief executive John Lyttle would be leaving, its debt had been refinanced and sales over the first half of the year were down, AJ Bell analyst Russ Mould noted a break up of the Boohoo was on... Read more
“A review of each division to ‘unlock and maximise shareholder value’ is code for corporate restructuring and that points to a sale or demerger of some of its assets,” he said.
“Selling Karen Millen and Debenhams is the obvious starting point, leaving Boohoo with a sharper focus on a younger target market.”
Mould added Boohoo was “under pressure to stop the rot” after its share price has retreated from above 400p in 2020 to below 30p as of Friday.
“When Boohoo talks about unlocking shareholder value, it means getting someone to put a fairer price on certain divisions by separating them,” Mould continued.
“In doing so, they wouldn’t carry the stigma and valuation discount that comes with being part of a flagging retail group.
“It looks like chief executive John Lyttle has decided he doesn’t want to be around for the break-up. He’s done everything he can to save the group and his strategy hasn’t worked.
“A new debt facility might look as if it gives Boohoo some breathing space but nearly half of it is repayable by next August. That means it had better find some solutions to the problems soon.”
Shares tumbled 6.1% on Friday.
10.34am: BP mulling sales of stake of offshore wind wing
BP PLC (LSE:BP.) is said to be mulling the sale of a minority stake in its offshore wind business.
Bank of America has been recruited to line up partners for the business to reduce its share of investment into offshore wind developments, according to Reuters.
This would come after the oil giant has further scaled back green commitments recently and faced pressure over its energy transition strategy, given rising oil and gas margins.
BP reportedly paused new investments in new offshore wind last month, while plans emerged over a sale of its US onshore wind business.
As of June, BP had 9.6 gigawatts worth of offshore wind projects in the pipeline and also held stakes in farms across the likes of the UK, Germany, US and Asia.
A Reuters-cited source said BP remained committed to developing major offshore wind projects.
Shares climbed 1.3% on Friday.
10.08am: Insolvency rates among individuals and firms grow in September
Insolvency rates among both individuals and companies picked up in September, figures showed on Friday.
Some 10,651 individual insolvencies were reported in September, marking a 44% jump year-on-year and a 6% increase against August.
This included 567 bankruptcies, alongside 4,032 debt relief orders and 6,052 individual voluntary arrangements, according to figures from the Insolvency Service.
The number of companies falling into insolvency over the month also increased by 2% against August, as 1,973 registered companies failed, though this marked a 7% drop against September 2023.
9.54am: Mothercare skyrockets on swing to profit
Mothercares shares skyrocketed almost 50% on Friday after the children’s goods retailer reported a swing to profit earlier in the day.
Though sales had fallen by 23% over the year to March, Mothercare reported a £3.3 million statutory profit against a £0.1 million loss previously... Read more
Shares jumped 47.1% to 5p following the update, placing Mothercare as the day’s biggest riser across the FTSE AIM all-share index.
9.43am: Job adverts slump pre-Budget
The number of job vacancies being advertised across the UK fell below 1.6 million for the first time in two years last month as businesses braced for the upcoming Autumn Budget.
Job postings fell by 10% to 1.54 million between August and September, according to the Recruitment & Employment Confederation (REC).
This came as many employers adopted a “wait-and-see approach” ahead of the October 30 Budget, REC chief executive Neil Carberry noted.
The government has previously warned of a “painful” Budget to come, leaving speculation around a string of tax hikes as it grapples with a so-called £22 billion “black hole” in public finances.
Carberry added clarity around the government’s new industrial strategy and the Employment Rights Bill recently had helped, but there were “still nerves about the longer-term impact on hiring with so much still to determine”.
“This is why most businesses are looking to the Budget at the end of the month before they decide how to invest, to tell them what money they will have to invest in hiring,” he said.
“The chancellor must demonstrate an understanding of the challenging cost environment that businesses face after a period of high inflation and interest rates, and the relief they now need.”
9.21am: FTSE 100 in red but miners bounce back
London’s blue chips came under pressure on Friday morning as the likes of housebuilders weighed on the FTSE 100.
Barratt Redrow PLC (LSE:BTRW), Persimmon PLC (LSE:PSN) and Taylor Wimpey PLC (LSE:TW.) were all among the day’s early fallers, prompting the FTSE 100 to a 9-point fall to 8,375.
“Budget uncertainty continues to unsettle the outlook despite new government pledges to revive the sector,” interactive investor analyst Richard Hunter commented.
Miners emerged among the gainers in the meantime, as stocks appeared to hit recovery mode after a drop on Thursday following China’s latest package to stimulate its struggling economy.
Antofagasta PLC (LSE:ANTO), Anglo American PLC (LSE:AAL), Glencore PLC (LSE:GLEN) and Rio Tinto PLC all sat among the early risers, led by Asia-focused insurer Prudential PLC (LSE:PRU).
This was despite news overnight that Chinese economic growth slowed to 4.6% over the third quarter, which was better than markets had expected but below the country’s 5% target.
Further interest rate cuts were hinted at by the People’s Bank of China though, with Deutsche Bank analysts forecasting the 5% target would be hit in the fourth quarter.
“[We] see upside risks if the government implements additional stimulus measures within the next few weeks,” Deutsche added.
8.56am: Retail sales growth slows in September
Sales growth across Britain’s retail sector slowed in September, dragged down by a drop at food shops and petrol stations, figures showed on Friday.
Sales ticked up by 0.3% over the month, against August’s 1.0% growth, according to the Office for National Statistics (ONS).
This came as computer and telecommunications retailers enjoyed a boost, in turn buoying non-food sales.
Sales across department, clothing and household goods stores increased by 1.9%, 0.3% and 0.5% respectively, while other non-food shops saw a jump of 5.5%.
Food store sales went into decline in the meantime though, falling by 1.9% on a 2.4% drop in supermarket volumes.
“Comments from retailers pointed to unseasonably poor weather and consumers continuing to cut back on luxury food items,” the ONS said.
This also coincided with a 0.1% fall in automotive fuel sales.
“After a challenging year for the retail sector, the industry will be pleased to see official figures revealing sustained growth in September,” Shopify director Deann Evans commented.
“While this data signals hope for retailers, our Holiday Retail Report data shows increased spending is unlikely to be frivolous.”
She added the majority of Brits, or 83%, were still searching round for the best discounts, while 65% planned shops around sales to save money.
8.38am: Gold surpasses $2,700 mark for first time
Gold’s rally remained well and truly back on course come Friday as the price of the yellow metal surged past US$2,700 for the first time.
A 0.93% gain for the day saw gold at US$2,707 an ounce on Friday, after a climb to as high as US$2,714 earlier on in the morning.
Concern over mounting global debt has emerged as the latest driver in gold prices, according to Bank of America analysts, as traders also seek refuge from fiscal uncertainty.
Analysts from the bank had reiterated a bullish forecast for gold to top the US$3,000 mark as the likes of US debt is expected to hit a record high in the coming three years.
“Neither Kamala Harris nor Donald Trump seem to prioritise fiscal consolidation,” analysts added, discussing the US presidential election.
“An analysis of policy platforms in advanced economies suggests policymakers strongly favour fiscal expansion.”
8.12am: Boohoo signals boss' exit as business review launched
Boohoo Group PLC (AIM:BOO) chief executive is to depart the business as a review of options is launched and after a debt refinance.
John Lyttle informed the board of his intention to step down after five years in the role, the company said on Friday.
A new £222 million debt refinancing deal was also unveiled, consisting of a £125 million revolving credit facility to October 2026 and a £97 million loan due next August.
Boohoo added the business review would cover options for each of its divisions, including the Debenhams, Young Fashion and Karen Millen brands.
“The board believes that the group remains fundamentally undervalued,” Boohoo said, despite efforts to drive cost efficiencies and reinvigorate Debenhams and Karen Millen.
Trading figures for the first half of the year were also provided, showing revenue down 15% at £620 million and a drop in adjusted earnings from £31 million to £21 million... Read more
Shares fell 5.4% early on.
7.45am: Mothercare posts profit despite Middle East hit
Mothercare PLC (LSE:MTC) has said it swung to statutory profit last year despite a drop in sales.
Statutory profit for the year to March sat at £3.3 million, the children's goods retailer reported on Friday, against a £0.1 million loss previously.
On an adjusted basis, operating profit climbed by 5% to £6.5 million, while net debt climbed from £12.9 million to £14.9 million.
This was despite a 23% drop in group revenue to £56.2 million over the year, as franchise partner sales fell 13% to £280.8 million.
Geopolitical uncertainty hit the figure, Mothercare said, especially in the Middle East, which accounted for 41% of the company’s sales... Read more
7.16am: Stocks seen lower
Stocks were seen reversing on Thursday’s 56-point gains ahead of Friday’s trading, with futures showing London’s blue-chip index down by 26 points at 8,388.
A busy day of company updates on Thursday had seen Rentokil Initial PLC (LSE:RTO) top the day’s risers, as Entain PLC (LSE:ENT) also climbed.
Friday was set to be quieter on the reporting front, with retail sales figures set to dominate proceedings in London ahead of a string of international updates from the likes of American Express Company (NYSE:AXP, ETR:AEC1), Procter & Gamble Co (NYSE:PG, ETR:PRG), Schlumberger NV (NYSE:SLB) later.
Asian markets saw a mixed performance overnight on news Chinese economic growth slowed to 4.6% over the third quarter.
Though this was slightly better than analysts had been forecasting, it marked the slowest rate seen since early 2023.