- FTSE 100 closes in green
- Informa storms ahead after raising guidance
- Housebuilders lower after weak Rightmove survey
4.41pm: FTSE closes ahead
FTSE 100 closed the day higher to start of what will be a news-rich week but the pound slipped against the US dollar.
The UK's premier share index finished up around 67 points, or 0.92%, at 7,385.
"Sterling-watchers have their work cut out for them this week," noted Chris Beauchamp, chief market analyst at online trading group IG.
"Normally unemployment data, inflation figures and retail sales would be enough to keep track of, but the fiscal statement this week adds spice to the pound’s outlook. Barring some remarkable surprises, this week is not likely to be overflowing with good news for the UK economy."
Against the dollar, the pound dropped 0.98% to stand at US$1.1721.
On the corporate front, clothing company Joules announced it was heading into administration.
3.45pm: FTSE in buoyant mood
Heading to the close and the Footsie is in fine fettle, testing the 7,400 level, and around its best levels for the day supported by a better than expected start in the US.
At 3.45pm the FTSE 100 was up 81 points at 7,399 while the FTSE 250 was down 23 points at 19,593, around 300 points above earlier lows.
Informa PLC (LSE:INF) was a strong performer, up 6%, after raising revenue and profit guidance, but Harbour Energy slumped 10% on speculation that the energy windfall tax will be increased and extended in Thursday’s autumn statement.
Housebuilders remained a weak feature following a survey from Rightmove which pointed to falling prices backing up other recent surveys of the housing market.
Persimmon PLC (LSE:PSN), Barratt Developments PLC (LSE:BDEV) and Taylor Wimpey PLC (LSE:TW.) all down. Redrow PLC (LSE:RDW) was also lower hit by a downgrade by broker, Citi to neutral.
On the plus side, IT provider Kainos gained as the firm posted a jump in first-half profit and revenue as it hailed strong underlying demand.
In the six months to 30 September, adjusted pre-tax profit rose 16% to £34mln, on revenues of £179.8mln, up 26% on the same period a year earlier.
Revenue from digital services was 17% higher at £110.5mln, reflecting increased demand for digital transformation primarily across the public and commercial sectors.
Shares advanced 3.2%.
3.15pm: UK firms plan big pay increases
UK employers are planning the biggest pay hikes in a decade to fill roles but real-term wages will still grow more slowly than inflation, a survey showed on Monday.
The quarterly survey by the Chartered Institute of Personnel and Development (CIPD) found employers expect to raise their basic pay rates by 4% on average over the coming year, and by as much as 5% in the private sector – the largest since the CIPD’s records started in 2012.
“Pay awards are expected to rise by the highest amount we’ve seen in our survey for 10 years but it’s being outpaced by rising prices,” CIPD labour market economist Jon Boys said. “Rather than feeling the benefit of higher pay, most will face a real-terms pay cut.”
The figures add to concerns from the Bank of England about an overheating labour market and historically rapid wage gains, which many of its officials fear could fuel further inflation that currently stands at a 40-year high of 10.1%.
Britain’s jobs boom has yet to peak, with 69% of employers planning to hire in the next quarter, the CIPD said.
2.44pm: FTSE 100 at best levels for the day
FTSE 100 has pushed to its best levels for the day despite a weak restart on Wall Street.
At 2.45pm the lead index was 60 points to the good at 7,378 while the FTSE 250, although still down, was off worst levels for the day, 29 points lower at 19,587.
Shortly after the opening bell, the Dow was up 7 points, less than 0.1%, at 33,754, while the Nasdaq Composite dipped 114 points, 1%, to 11,209 and the S&P 500 slid 12 points, 0.3%, to 3,981.
Despite the slow start, market sentiment is positive overall, according to Nationwide chief of investment research Mark Hackett.
“A notable shift has occurred in the market, with investors increasingly risk-on across asset classes,” Hackett said, according to CNBC. “Technical indicators have improved dramatically, with investor sentiment, momentum, breadth, and risk factors all showing notable improvement.”
2.17pm: BP starts shipping gas from Mozambique
BP PLC (LSE:BP.) has successfully loaded the first liquid natural gas (LNG) cargo from Mozambique’s offshore Coral Sul FLNG facility, the country’s first LNG project and first floating LNG facility ever deployed in the deep waters of the African continent.
Under its long-term contract, BP will purchase 100% of LNG output from Coral Sul FLNG which has the capacity to produce up to of 3.4mln tonnes of LNG per year.
The energy giant has a target for an LNG portfolio of 30mln tonnes by 2030,
"The start of production at the facility comes at an important moment, as LNG plays a key role supporting energy security" BP said.
1.30pm: UK economy permanently damaged by Brexit
Former Bank of England policy maker Michael Saunders said Britain's exit from the European Union is one of the reasons why the UK is now entering a period of austerity.
"The UK economy as a whole has been permanently damaged by Brexit," said Saunders in an interview with Bloomberg TV.
"If we hadn't had Brexit, we probably wouldn't be talking about an austerity budget this week. The need for tax rises, spending cuts wouldn't be there."
Saunders, who sat on the Bank's monetary policy committee from 2016 until August this year, said that the UK's decision to leave the EU and the customs union reduced the country's potential economic output and eroded business investment.
12.50pm: Opec cuts oil demand forecast
Oil cartel Opec has revised down its predictions for oil demand this year, partly due to the slowing global economy.
Forecast oil demand this year has been revised down by 100,000 barrels per day, to 2.5mln barrels per day.
The revision is due to “the zero-COVID-19 policy in China, ongoing geopolitical uncertainties and weaker economic activities”, Opec said.
It has also cut its forecast for global oil demand growth in 2023, again by 0.1 mb/d.
12.00pm: US markets seen lower
US stocks are expected to open lower on Monday after last week’s strong gains in the wake of softer-than-expected inflation data for October, which strengthened expectations that US rate setters will scale back on interest rate hikes.
Futures for the Dow Jones Industrial Average were 0.3% lower in pre-market trading, while those for the S&P 500 were down 0.4%, and contracts for the Nasdaq-100 fell 0.7%.
“Market mood outside crypto is extremely joyful after last week’s inflation data surprised investors to the downside and China announced to relax Covid measures, and boost its shattered property sector,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
“Although US inflation remains relatively high to contain a perhaps premature bull run on dovish Fed expectations, news from China could help keep the mood nice and sweet,” she added.
Notably, US president Joe Biden and China’s president Xi Jinping will hold talks today on the sidelines of the G20 summit in Bali. Talks could go either way; they could either boost, or hit risk appetite in Chinese, and global assets. Investors will be watching developments closely.
The path for US interest rates continues to have a big impact on share prices. The Federal Reserve has delivered four 75 basis point interest rate hikes this year as it tries to fight runaway inflation.
Investors worry that the higher cost of borrowing will dent economic growth. While inflation remains elevated, it is starting to show signs of a softening. In data out last week, headline inflation fell to 7.7% in October, versus 8.0% expected by analysts and from 8.2% printed a month earlier, stoking expectations that US rate-setters will scale back on further interest rate hikes.
11.10am: Redrow hit by Rightmove survey and Citi downgrade
Shares in Redrow PLC (LSE:RDW) were hit by a double whammy of another weak survey on the UK housing market from Rightmove and a rating cut by broker Citi which downgraded the stock to neutral as it believes the risk/reward now looks more balanced at its current valuation.
“Although a modest normalisation in mortgage rates should reduce the risk of a steep house price decline, we believe the elevated rate environment still drives materially lower demand and site absorption impacting the trajectory of the outlet pipeline on a 2-3 year view” the broker said.
In addition Citi highlighted the softer trends noted in recent trading point to a higher risk of cancellations and incentives across the homemover regional markets, which may have been the biggest beneficiary of the strong market dynamics since the pandemic and represent a core part of the group's exposure.
“We also believe the recent investment in divisional growth in Crawley hinders scope for significant overhead optimisation near term if market conditions worsen from here” Citi commented.
Shares in Redrow were 3% lower mid morning at 455p.
10.30am: Harbour Energy tops FTSE 100 fallers on windfall tax worries
Shares in North Sea oil and gas producers dropped this morning, amid reports that chancellor Jeremy Hunt is considering increasing the emergency levy from 25% to as much as 35% in his autumn statement on Thursday.
Harbour Energy is the top faller on the FTSE 100, down 7%, while shares in Enquest have dropped 9%.
10.00am: UK business confidence hits 13 year low
UK business confidence fell by 10% to its lowest level in at least 13 years in October, but was stronger than European peers, according to the latest Accenture (NYSE:ACN) / S&P Global UK Business Outlook.
At +18%, the net balance of manufacturing and service sector firms expecting activity to increase over the next 12 months was the lowest recorded since 2009.
The latest results compared with net balances of +28% in June and +56% in February.
???????? The @AccentureUK / @SPGlobal UK Business Outlook pointed to a weak level of confidence among UK firms in October, as business expectations slumped to their lowest since 2009 (1/5) https://t.co/ftOjK9BQ9d pic.twitter.com/zOZkQRAIaZ
— S&P Global PMI™ (@SPGlobalPMI) November 14, 2022
However, despite tough economic conditions, the business outlook maintained a positive projection, with around 41% of surveyed firms expecting output to rise, against nearly one-quarter (23%) that project a decline.
Nearly all (12) of the 14 sectors covered by the survey predicted growth, led by strong expectations among manufacturers of transport and electrical goods.
Hospitality was the only industry to signal a pessimistic outlook, with fears of reduced customer spending and high energy costs.
UK companies were much more confident of a rise in activity than other countries in Europe (+4%), while firms in Germany and Spain gave negative projections for the next 12 months.
Simon Eaves, market unit lead for Accenture (NYSE:ACN) in the UK & Ireland, said: “As we head towards what is likely to be a tough winter for the UK economy, business confidence has understandably been shaken.”
“However, many British companies continue to demonstrate resilience in the face of economic difficulties. Hiring plans remain positive and overall optimism, whilst muted, is higher than many of our European counterparts.”
9.30am: Frasers Group eyeing another acquisition
Frasers Group PLC (LSE:FRAS), the high street empire founded by Mike Ashley, is close to agreeing a deal to buy the stricken Savile Row tailor Gieves & Hawkes according to a report on Sky.
Sky News understands that Frasers Group is in advanced talks to buy the brand, which was put up for sale earlier this year after its Hong Kong-based owner collapsed into liquidation.
The value of the deal was unclear but will not be material in the context of Frasers' size.
Frasers, where Mr Ashley remains the majority shareholder but is no longer a director, has been contemplating an acquisition of Gieves & Hawkes since September.
9.00am: Housebuilders weaken after Rightmove survey
Another sign that the UK property market is softening.
The latest Rightmove House Price Index showed that house prices fell 1.1% in November, taking the average asking price to £366,999 compared to a 0.9% rise the month before.
Year-on-year, house prices grew by 7.2%, compared to annual growth of 7.8% in October.
November traditionally sees sellers price more competitively, as they look to offload properties ahead of Christmas.
Rightmove said this year's fall was in line with the average November declines seen during the pre-pandemic years of 2015 to 2019.
The news sent shares in housebuilders lower bucking the firmer market trend with Persimmon PLC (LSE:PSN) (down 1.2%), Barratt Developments PLC (LSE:BDEV) (down 0.85%), Taylor Wimpey PLC (LSE:TW.) (down 0.7%) while Rightmove PLC (LSE:RMV) itself dropped 0.7%.
On the upside Informa PLC (LSE:INF) continued to lead the FTSE 100 risers, up 6.4%.
Victoria Scholar, Head of Investment, interactive investor said: “The post-pandemic return to physical events has helped spur growth for Informa with B2B demand and Academic Markets enjoying impressive growth.”
“Informa also continued to return cash to shareholders with over £450mln of its £725mln share buyback programme now completed and the resumption of its ordinary dividend.”
FTSE 100 holding its early gains, up 33 points.
8.18am: FTSE 100 opens higher
The FTSE 100 made a bright start on Monday as investors look ahead to a busy week of UK economic data, the autumn statement on Thursday and as the G20 summit kicks off in Indonesia.
At 8.15am the lead index was up 31 points at 7,349 although the FTSE 250 slipped 34 points to 19,582.
Shares in business publisher and events organiser Informa PLC (LSE:INF) stormed 7% higher as it upgraded its full-year outlook on the back of strong underlying revenue growth in the first 10 months of the year.
The firm reported underlying revenue growth of 41% in its continuing business during the period, thanks to strong trading in all three of its business-to-business markets businesses and in its academic market business.
Informa increased its guidance range for revenue to between £2.30bn to £2.35bn for 2022 with adjusted operating profits forecast between £490mln and £505mln to reflect "further outperformance of live and on-demand events" in North American, Europe, the Middle East and Africa, and Southeast Asia.
Retailers were in focus as upmarket retailer Joules said it was heading into administration, while press reports at the weekend suggested Frasers Group PLC (LSE:FRAS) (up 1.25%) is to continue its acquisitive streak by picking up stricken Savile Row tailor Gieves & Hawkes.
Wood Group (John) PLC rose 2% in early trading after confirming the conclusion to a long-running legal dispute.
It said it will pay US$115mln to settle the claim brought by Enterprise Products Operating LLC.
In 2016, Enterprise filed a lawsuit against Amec Foster Wheeler, a company Wood acquired in 2017, and one of its subsidiaries.
8.02am: Sterling rangebound against euro, dollar peak speculation mounting
After hitting three-month lows at the tail end of last week, the US Dollar Index gained ever so slightly once the Asia markets opened on Monday morning.
Traders are recalibrating their dollar sentiment following a surprise inflation reading last Thursday that saw the core rate coming in softer than expected.
DYX is currently priced at 106.36, and with little on the US economic calendar (save for a tense meeting between US president Joe Biden and Chinese leader Xi Jinping later today), the index is expected to maintain low volatility levels.
GBP/USD pared back around 35 pip from Friday’s 10-week high this morning, but at US$1.176, the pair remains in a strong position relative to recent performance.
Will GBP/USD run on a dollar peak? – Source: capital.com
EUR/USD similarly dipped, but the pair remains fairly above parity at USD$1.032.
EUR/GBP is looking fairly rangebound at 87.6p, with a resistance point pegged to last-week’s high of 88.3p.
With the greenback substantially down against the Japanese yen (having retraced to August highs of 139.50) and the Swiss franc (also down to August highs of 94.62) speculation of a dollar peak is mounting.
We’ll find out as the week progresses.
7.40am: Joules' heads towards administration
Retailer, Joules Group, is calling in the administrators after failing to find a new investor.
In a brief statement the company said:" On 7 November 2022, the Company announced it was in advanced discussions with a number of strategic investors to provide a cornerstone investment in an equity raise process. "
"The company also announced it was in discussions regarding a bridge financing proposal in order to enable continued progress to be made with the re-financing plans referred to above."
"The board confirms these discussions with various parties have not been successful and have now terminated."
7.26am: S4 Capital reports strong growth in quarter three
S4 Capital PLC (LSE:SFOR) reported strong growth in the third quarter with billings of £484.2mln, up 51%, and 21% like-for-like, while revenue was up over 68% to £300.1mln, and gross profit/net revenue up 73% to £249.9 million, or 29% on a like-for-like basis.
S4 said it continues to trade in line with its top line objective for 2022 of 25% like-for-like gross profit/net revenue growth and its profitability objective of operational EBITDA of approximately £120mln.
“We have seen little negative impact so far in the remainder of 2022 from the current macro political and economic gloom” the company said.
The digital advertising agency, run by Sir Martin Sorrell, said third quarter the growth reflected the improved control of hiring across the company combined with an acceleration of revenues.
The impact of this change in emphasis was most marked in the content practice, which started to improve operational EBITDA significantly, S4 said.
The Data & Digital media practice was not as strong in gross profit/net revenue growth and in operational EBITDA conversion in the third quarter, but continued to benefit from the uncertainty and the increase in the marketing index as a result of both Apple's decision around IDFA and Google's around deprecation of third party cookies.
Technology services continued to perform very strongly at all levels.
Sir Martin Sorrell, executive chairman, said: "Despite the current macro political and economic gloom and slowing tech growth, our top-line momentum has been more than maintained in the third quarter and remains relatively strong into the fourth quarter.“
“Operational EBITDA continues to progress in line with the revised target issued in July.”
7.00am: FTSE set for a bright start
FTSE 100 expected to open slightly higher on Monday after Democrats in the US managed to keep control of the Senate, and as investors look ahead of the autumn statement on Thursday.
Spread betting companies are calling the lead index up by around 18 points.
In the US on Friday the Dow closed up 32 points, 0.1%, at 33,748, the Nasdaq Composite surged 209 points, 1.9%, to 11,323 and the S&P 500 improved 37 points, 0.9%, to 3,993.
For the S&P 500, it was the index's best week since June.
The corporate diary is fairly thin in London with a trading statement expected from Informa PLC (LSE:INF).