FTSE 100 closes 1.58% ahead
BT and Burberry lead fallers
China's economic growth slows sharply
4.45pm: FTSE closes up
FTSE 100 closed ahead on Friday as traders 'buying the dip' came back to the markets.
Britain's premier share index finished up around 111 points, or 1.58%, to stand at 7,151.
"The bears had been losing their strength all week, despite the drops in the wake of the CPI reading and poor JPMorgan results," noted market analyst Chris Beauchamp at online trading firm IG. "Equities attempted rebounds after both these events, and today the buyers have finally succeeded in taking control, pushing the Dow up 2% and back above 31,000 once again," he added.
3.50pm: Virgin Media O2 news
Virgin Media O2 has offered to buy TalkTalk, with the latter valuing itself at approximately £3bn.
The mobile phone giant, which is jointly owned by Telefonica and Liberty Global (NASDAQ:LBTYA), presented an indicative bid for one of Britain’s largest broadband providers.
Talks between the two parties are reportedly in early stages and being held on a non-exclusive basis, Sky News said, citing City sources.
This followed three months after Salford-based telecommunications company received several approaches from rivals including Vodafone and Sky.
TalkTalk has some 4.2mln UK customers and 2.4mln fibre connections, according to its website.
3.11pm: America opens higher
US stocks climbed after five consecutive days of losses following a stronger than expected June retail sales report (up 1%), coupled with a mixed bag of bank earnings.
The Dow Jones Industrial Average surged 1.6%, or 480 points, higher to 31,111, while the S&P 500 was close behind, up 1.3%, or 46 points, to 3,637.
Meanwhile, just under an hour into open, the tech-heavy Nasdaq jumped 0.9%, or 99 points, to 11,350.
“The retail sales number is telling us that the consumer is still out there,” Steve Sosnick, chief strategist at Interactive Brokers, commented.
Although much of the rise was attributed to higher prices of gasoline and food, it seems shoppers are yet to succumb to the surge in prices.
2.10pm: Hospitality feels abandoned by government
Almost two-thirds of hospitality businesses claimed to have felt abandoned by the UK government during and in the wake of the Covid-19 pandemic, a survey showed.
Peckwater Brands, a delivery franchising firm, asked 201 senior decision-makers in the sector for their thoughts on how the industry has been dealt with.
Hospitality was one of the hardest hit by the pandemic, with 64% admitting they felt down despite the furlough scheme.
In April, national insurance for employers rose to 15.05% from 13.8%, with 69% of respondents believing that decision was a bad idea.
VAT was also hiked three months ago, returning to 20% after being slashed to just 5% during Covid-19 and 12.5% from October. Roughly 80% wished this was delayed at least a year.
With the sector accounting for 5% of Britain’s GDP, nearly £115bn was lost in sales between March 2020 and February 2022, according to lobby group UK Hospitality.
Therefore, a £140bn-a-year industry was 43% lower than where it would usually be, equating to 45 weeks of revenues over the nearly two years, it added.
1.26pm: No more working from home for Frasers
Frasers Group PLC (LSE:FRAS), which is owned by Mike Ashley and is the parent company of Sports Direct, scrapped working from home.
Its office staff will no longer partake in “Frasers Fridays” following a memo that claimed workers have not been “treating Friday as a working day."
The retail group’s memo from chief operating officer, David Al-Mudallal, seen by The Sun, said there have been "too many examples" of staff not being contactable when necessary.
Al-Mudallal reportedly told workers some of their social media profiles were a significant part of the giveaway.
A spokeswoman insisted it thinks people work best in an office and told the BBC that “collaboration [was] key to how [it] delivers value.”
Bosses at Frasers were measuring productivity on Fridays since the beginning of the flexible working scheme in 2020.
12.45pm: 76% of companies struggling to recruit
Three in every four UK companies that are looking to recruit workers are struggling to do so, according to new research, with the construction sector having the most trouble.
With around 61% of firms were looking for staff in the second quarter, similar to 60% in the first quarter, the British Chambers of Commerce found that 76% were reporting difficulties.
The research, which was carried out with almost 6,000 businesses, the construction sector is having the toughest time, followed by production, manufacturing, and hospitality.
"Businesses remain under huge pressure to fill jobs, but record levels of recruitment difficulty are showing no signs of improvement," said BCC head of policy Jane Gratton.
"Solutions are urgently needed so that firms can keep their doors open throughout these tough times."
The FTSE 100 and FTSE 250 are unconcerned, with few fallers in those sectors.
London's gauge of blue-chips is back on the front foot after a wobbl, now up 71 points or 1% higher at 7110.
12.12pm: Big earnings season
Thoughts of many investors are turning to next week, which includes some updates from Ocado and Royal Mail in the UK and Tesla and Netflix across the pond as US earnings season moves into top gear.
With tech bears romping happily in recent months and the Nasdaq index down over 20% since the start of April, analysts at Wedbush said next week "will be key for the tech sector to kick off earnings", with Wall Street highly anticipating this earnings season "to better gauge the health of consumer/enterprise demand" amid the softening macroeconomic backdrop.
In a worst-case scenario Street numbers for 2023 are seen coming down by less than 10% from today's expectations, according to Wedbush's modelling, while in a base case scenario they are down around 5% from today's numbers, though this is outside of forex impact.
The Wedbush view is that "much of this is already baked into tech stocks at current levels". (Read more of Wedbush's earnings season preview here.)
11.27am: FTSE 250 outperforming
London's mid-caps are outdoing their larger peers this morning, led by Aston Martin Lagonda despite it announcing a discounted £653mln fundraising.
AML shares are up over 20% to 447.5p, which is close to the level at which the rumours emerged two weeks ago that the sportscar maker was planning a rights issue.
It has confirmed plans for a £575mln rights issue and a £78mln strategic investment from Saudi Arabia's sovereign wealth fund, which will become its second-largest investor and get a seat on the board. (Read more on the Aston Martin fundraising here.)
Also on the FTSE 250 leaderboard this morning are Ferrexpo PLC (LSE:FXPO), Darktrace PLC, Micro Focus International PLC, Marks & Spencer Group PLC and index newcomer ASOS PLC.
Fallers are led by Britvic PLC ahead of a trading update scheduled for next week, precious metals miner Hochschild Mining PLC (LSE:HOC, OTCQX:HCHDF) and budget airline Wizz Air Holdings PLC - even though airline-related names Rolls Royce Holdings PLC and Melrose Industries PLC (LSE:MRO, OTC:MLSPF) are now topping the blue-chip index.
The FTSE 250 index is up 159 points, or 0.9% at 18,639.67, while the Footsie is up 49 points or 0.7% at just over 7088.
10.20am: Rio dances lower
Rio Tinto PLC (LSE:RIO) was the second biggest faller this morning, down 2.6% to 4,450p, following a warning that "headwinds are considerable" due to labour shortages, muted Chinese demand, falling commodity prices and the threat of recession.
The FTSE 100-listed miner noted that copper, aluminium and iron prices were declining while the economic outlook weakens.
The aluminium LME price dropped 32% to US$2,397 per tonne at the end of the second quarter, while the copper LME price was down by 20% at the end of the second quarter to US$3.74/lb.
In a production report for the second quarter, the mining giant revealed iron ore output and deliveries were up 10% and 12% respectively compared to the first quarter of this year, with mined copper up 1%, but aluminium production was down 1%.
Full-year guidance for iron ore and copper was maintained, as for most metals, but aluminium, alumina and diamond guidance was trimmed slightly.
Fellow blue-chip miners Anglo American and BHP Group declined 1.7% and 0.9% respectively.
9.42am: Burberry plummets
Burberry Group PLC (LSE:BRBY) sunk 6.8% to 1537p as it reported a 35% drop in sales to mainland China in the 13 weeks to 2 July due to restrictions and store closures designed to control Covid-19 outbreaks.
Although the British luxury fashion house grew its global turnover by 5% in the first quarter despite “significant disruption from lockdowns in mainland China.”
Burberry chief executive Jonathan Akeroyd commented: "Our focus categories, leather goods and outerwear, continued to perform well outside of mainland China and our programme of brand activations boosted customer engagement.
“While the current macroeconomic environment creates some near-term uncertainty, we are confident we can build on our platform for growth."
The designer brand is continuing to target high single-digit revenue growth and 20% margins in the medium term, it said in a trading statement.
However, it expects to take a £190mln revenue hit and a £90mln knock to operating profits for the full year due to currency effects.
The retailer grew its Europe, the Middle East, India and Africa business by 47%, where it reported “an increase in spending” to above pre-pandemic levels.
Alex Smith, senior analyst for luxury goods at Third Bridge, said: “Burberry should remain resilient during a recession but it is more exposed than some other luxury brands.”
9.08am: Further rail strikes in August announced
Workers at Network Rail and 14 train operators announced they intend to walk out for a further two days in August following an unresolved pay dispute and conditions, the RMT union said.
As well as the union’s workers striking on 27 July, approximately 40,000 workers will also walk out on 18 and 20 August.
Mick Lynch, RMT general secretary, said the government and rail industry must understand the "dispute will not simply vanish", urging for a pay offer that "helps deal with the cost-of-living crisis, job security for our members and provides good conditions at work."
This follows the largest rail strike in decades in June.
Earlier this week, drivers from eight rail companies agreed to strike on 30 July in a similar dispute, the trade union Aslef confirmed (read more).
8.26am: British American Tobacco and DS Smith lead risers
The FTSE 100 is making a laboured effort in early trading to try and recover some of the losses from the past two days, up 20 points or 0.3% so far to 7,060.47.
Top risers include British American Tobacco PLC (LSE:BATS) and cardboard box maker DS Smith PLC (LSE:SMDS).
Leading the fallers is Burberry Group PLC (LSE:BRBY), down 4.3%, after reporting sales in the past quarter were badly marred by the impact of the recent lockdowns in China.
Market analyst Richard Hunter at interactive investor said: “The group must now hope that pent-up demand is now building again in China, and the early signs are tentatively encouraging. Even so, until such time as that economy can resume firing on all cylinders, the clouds will inevitably linger.”
Miners are also dragging on the index's recovery attempts as Rio Tinto PLC (LSE:RIO) warned that "headwinds are considerable" due to labour shortages, muted Chinese demand, falling commodity prices and the threat of recession.
Rio shares are down 1.75%, while rivals Anglo American and BHP Group are down 1.35% and 0.47% respectively.
7.10am: FTSE tipped for recovery
The FTSE 100 was tipped to recover some of Thursday’s losses as two members of the US Federal Reserve suggested talk of a super aggressive rise in interest rates was premature.
Financial spread betters had Footsie rising by around 25 points an hour before the start of trading, with the mood helped by the Fed comments.
"Fed governor Christopher Waller, and St Louis Fed President Jamie Bullard both indicated they were erring towards a 0.75% hike at the 28 July FOMC meeting, and not the dreaded 1.0%,” noted Jeffery Halley, senior market analyst at Oanda.
Elsewhere, China's economic growth slowed sharply in the second quarter as the impact of Covid restrictions took a toll.
GDP in the April-June quarter grew 0.4%, which was the worst showing since 1992, bar a 6.9% contraction in the first quarter of 2020 due to the initial outbreak of Covid.
Economists had forecast a 1% gain after 4.8% growth in the first quarter.
Asian markets were mixed in response with Hong Kong lower and Japan higher towards the close of trading.
Burberry this morning also gave an indication of the mood in Asia with its first quarter trading update.
"Our performance in the quarter continued to be impacted by lockdowns in Mainland China but I was pleased to see our more localised approach drive recovery in EMEIA, where spending by local clients was above pre-pandemic levels,” said Jonathan Akeroyd, chief executive.
On a constant exchange rate basis, revenues were flat and up 1% on a like-for-like basis.
Mainland China saw a 35% decline due to Covid restrictions and store closures.