FTSE 100 Live September 29: British pound in the spotlight as stagflation fears plague the UK market
Terling remained under pressure today as fears of stagflation, the ongoing fuel crisis, and the possibility of earlier-than-expected hikes in US interest rates are responsible for the currency falling to its lowest level. since January.
The FTSE 100 index rallied, however, with Next’s latest earnings forecast update after a stronger-than-expected summer helping stocks rise 2% to an all-time high.
Lunchtime update: FTSE 100 higher, with AstraZeneca and Next in demand
The London blue chip index rose 67.47 points, or 0.96% more, to 7,095.57 shortly after 1pm.
Other news to read during your lunch break:
Blockages weigh on sales at Dishoom
Dishoom saw sales plummet by nearly 45% last year as closures forced the popular Indian restaurant chain to shut down for extended periods, according to the latest filings.
Its latest filings, for the year ended Dec. 27, show turnover fell to £ 29.2million from £ 59.9million a year earlier. It fell to a pre-tax loss of £ 3.77million, compared to a pre-tax profit of £ 4.71million in 2019.
Dishoom blamed the falls on Covid-related closures and restrictions in 2020, saying the situation was having a “profound impact on the business.”
The Yu group against the slowdown in the energy market
But Yu Group, an AIM-listed minnow worth just £ 40million, is going against the trend. The company today said it has made a profit of £ 920,000 in the past six months, with revenues soaring 44% to £ 65million.
“I sleep well at night,” Founder and CEO Bobby Kalar told The Standard today. “I have a strong hedging portfolio through 2023.”
Morrisons shares advance ahead of auction this weekend
Morrisons shares rose again today, as investors braced for a £ 10bn battle for the supermarket giant heading for a quick auction this weekend.
Rival contenders Clayton, Dubilier & Rice, the US private equity firm, and a consortium led by investment group Fortress, have embarked on a more than three-month bidding war to gain control of the fourth plus Great UK grocer.
Various proposals have been made, with the most recent offers being 285 pence per share of the former, which the Morrisons board has backed.
Morrisons shares rose 3.5 pence to 295.5 pence.
Stephen Hester’s new concert
Former Royal Bank of Scotland boss Stephen Hester is adding to his portfolio already loaded with board roles by taking a position at IBM spin-off Kyndryl Holding.
New York-based Kyndryl said Hester would be the company’s main independent director.
IBM announced earlier this year that it would divest its managed infrastructure business as Kyndryl by the end of the year.
“A ‘start-up’ of 90,000 people doesn’t show up very often,” Hester said.
Hester, 60, was called in to lead RBS’s recovery from the financial crisis, but left in 2013 under pressure from the government. Until June of this year, Hester was head of insurer RSA and he is expected to become chairman of easyJet in December. In addition, he is an independent director at Centrica, owner of British Gas.
Hester said he was “proud” to join Kyndryl in helping him “reach his potential”. The conditions were not disclosed.
Bank of America does not buy pound sterling oil history
Kamal Sharma, an analyst at Bank of America, does not believe the argument that the pound is suffering due to concerns over the ongoing oil crisis in the UK.
He writes in a note sent to customers today: ‘While we concede that rising domestic fuel prices are a headwind for the UK consumer, we don’t think recent developments are existential enough to weigh on the pound. sterling as was the case. Indeed, across the sessions in NY and Asia, we observe that the pound sterling was relatively stable – we would have expected continued selling pressure if the story was one of a fundamental deterioration in the UK economy. . More likely, we think the British pound succumbed to rebalancing pressures at the end of the month / quarter, as it did in the first and second quarters.
British pound stuck at January low
Stagflation fears blamed by some investors for the worst sterling performance of the year continued today as another surge in natural gas prices added to the nervousness.
Fears over the toxic combination of inflation and stagnant growth prospects have been fueled by rising oil and gas prices and the possibility that the Bank of England will be forced into an interest rate hike sooner. provided that.
The pound sterling remained at its lowest level since January today, dropping from around $ 1.37 on Tuesday morning to $ 1.35, a level not seen since January 11.
The end of quarter rebalancing is likely to be part of the reason for the weakness, but the situation comes with natural gas futures up 5.5% to 218p the therm today and crude Brent near the threshold of $ 80 per barrel.
A sharp increase in borrowing costs in the United States due to expectations of tightening monetary policy also put upward pressure on the US dollar. Wall Street’s S&P 500 was down 2% last night on large losses for stocks in high-growth sectors such as semiconductors, media and software.
There was a similar story in Europe, but the FTSE 100 Index largely reversed the trend thanks to the support of its dollar-generating stocks. The blue chip index fell 0.5% last night, but rose 63.63 points to 7,091.73 after bullish interim results from Next helped sentiment.
US-focused building materials company Ferguson posted the biggest gain, rising 295p to 10,530p, as it bought into the mining sector after Anglo American and Glencore added more 2%.
Royal Mail was the biggest drop after UBS analysts abandoned their ‘buy’ recommendation and lowered their price target from 590p to 440p.
Their cautiousness reflects the impact of mounting cost pressures at a time when pricing power in the industry is likely to wane as parcel sorting capacity is added in 2022.
Shares were above 600p in June but fell 5% or 26.4p to 452.8p after the downgrade.
SSE and Total sign wind power agreements
Energy giants SSE and Total have both announced plans to take wind power further, ignoring an exceptionally bad year for the renewable energy source.
SSE said it had signed a $ 208m (£ 153m) deal to enter Japan’s offshore wind market through a joint venture with local operator Pacifico Energy.
Elsewhere, French oil giant TotalEnergies has submitted a bid to build a new offshore wind project in Scotland that could one day power 2 million homes.
Total has partnered with Macquarie’s Green Investment Group and Scottish developer RIDG on a proposal to build the wind farm west of Orkney, which aims to provide two gigawatts of electricity by 2029. Total is working on the offer for 5 years.
The two wind turbine projects are coming despite an exceptionally bad year for the wind. The weak winds have contributed to the current energy crisis in the world and SSE said that “adverse weather conditions” meant that its energy production had declined by 32% in the last 6 months.
SSE forecasts a production deficit of 11% for the year. The company, which has also been hit by high hedging costs due to soaring energy prices, made an annual profit of between 7.5 and 10 pence per share. It was about half of what the market expected.
SSE shares fell 0.3%, or 5.5p, to 1598p. The total was half a percent lower in Paris.
The CMO Group hopes to benefit from government actions to fight the shortage of heavy truck drivers
Online building supplies retailer CMO Group expects government action to address the current shortage of truck drivers will help the company in the medium term.
The company has not been immune to the supply chain challenges facing the broader construction products industry.
CMO has taken “self-help” initiatives to help solve problems, such as expanding warehouse space for storage and increasing the number of couriers it uses.
He added that recent government actions, which have made it possible in particular to make available up to 50,000 additional HGV driving tests each year, “will enable improvements in the medium term, beyond the self-help actions that we are already leading “.
CMO said that as a result, the board remains confident that trading remains as expected.
Read the full story here.
Next FTSE 100 credentials
The FTSE 100 index recovered from yesterday’s losses to open 45 points higher at 7,073.1, helped by the strengthening of confidence in Next’s bullish interim results.
The following stocks were up 3% at 8.302p, which is close to the all-time highs seen earlier this summer. JD Sports Fashion also benefited from a gain of 22p to 1,072.5p.
AstraZeneca joined the riser board with a 2% gain after announcing an agreement to integrate rare disease specialist Caelum Biosciences into its recently acquired Alexion business.
Royal Mail was the biggest drop, down 6% or 27.2p to 452p in continuation of a recent downtrend.