FTSE 100 midday movers: Resource stocks shine
Minining and energy stocks powered to the top of the FTSE 100’s leaderboard in midday trade.
The gains came with oil and metals prices boosted by pledges from China that boosting the economy there would be a major priority for policymakers in 2023, raising hopes for the outlook for demand next year.
London Stock Exchange Group was among the biggest fallers amid the continued fallout from its $2 billion deal with Microsoft last week, in which the US tech giant will acquire a 4% stake in the operator of the London market. JD Sports was also a major faller after some eye-catching deal news late last week.
The high-street retailer is selling 15 brands to Frasers Group for almost £47 million and will file a £100 million write down on the value of the brands on its accounts.
City bankers could receive unlimited bonuses as Bank of England pay consultation begins
City bankers may soon be able to receive unlimited bonuses after the Bank of England today announced plans for a consultation on scrapping the so-called ‘bonus cap’.
The decision to scrap the cap, which sets limits on the ration between fixed and variable pay in financial services, was among the few policy moves that survived Kwasi Kwarteng’s disastrous ‘mini-Budget’ after much of it was axed by his replacement, Jeremy Hunt.
Under the current rules, which were introduced under EU legislation in 2016, city bankers may not receive a bonus greater than their salary, or not more than double their salary subject to shareholder approval.
Retail stocks weaken, oil giants lift FTSE 100
Retail sector worries intensified today after a City bank placed a £1 valuation on Marks & Spencer shares and turned more cautious on FTSE 100 stalwart Next.
JP Morgan delivered its gloomier assessment as rising living costs and strike action in the rail and postal networks threaten to derail the busiest shopping week of the year.
Investors took no chances today by dumping shares across the sector, with JD Sports Fashion the leading faller in the FTSE 100 index with a decline of 2% or 2.35p to 115.75p.
Sports Direct rival Frasers Group lost 6.5p to 728.5p and Next weakened 72p to 5554p after JP Morgan placed the fashion chain on “negative catalyst watch”.
The bank also cut its M&S stance to “underweight” with a 100p target price, a level that compares with more than 250p at the start of this year. The widely-held shares fell 1.5% or 1.8p to 117p, valuing M&S at about £2.3 billion in the FTSE 250 index.
The UK economic uncertainty was reflected in today’s wider stock market performance as the internationally-focused FTSE 100 recovered 34.19 points at 7366.31 but the FTSE 250 dropped 0.2% or 28.92 points to 18,559.56.
Commodity-focused stocks led London’s top flight, with BP and Shell up 3% after Brent crude futures started the week near $80 a barrel. The shares lifted 14.05p and 65p to 469.45p and 2308p respectively.
Mexico-based miner Fresnillo also benefited from a higher silver price to add 3% or 30.4p to 884.8p and commodities trader Glencore improved 6.4p to 537.5p.
The sell-off for Currys shares continued in the FTSE 250 as the electricals chain shed another 1.65p to 55.25p after last week’s half-year results. Bisto-to-Mr Kipling owner Premier Foods was also impacted by the weaker consumer outlook as shares dropped 3% or 3.2p to 106.2p.
Bus operator First Group moved in the right direction, lifting 5.1p to 103.2p, and there was further momentum for Games Workshop. It added another 110p to 8590p following last week’s Warhammer TV and film rights deal with Amazon.
Pay demands soar
WORKERS are expecting a pay rise of at least 10% next year, in the latest sign of tension between employers and the employed as Britain heads for one of the worst periods of prolonged strikes since the 1970s.
With the government digging in its heels over pay, fresh research shows that demands for wage increases are only growing as a cost-of-living crises spreads far beyond those on the breadline.
With inflation running at 11%, the highest for 40 years, many families are finding life hard.
Fresh research today by CV Library, one of the largest job websites in the UK, finds that nearly 17% of workers expect a 20% pay rise in 2023. Nearly 8% expect one of between 15% and 19%, while 26% expect somewhere between a 10% and 14% uplift.
Nurses, ambulance workers, postal and rail workers are all due to strike in the coming days.
Warnings about patient safety and Christmas disruption have so far failed to persuade union leaders, workers or government ministers to shift their positions.
Lee Biggins, Founder and CEO of CV-Library, said: “To expect a pay increase of more than 10% a year would have previously been a pipe dream or the result of a promotion rather than a realistic expectation but, it’s been 40 years since inflation has hit 11%.”
LADbible in the money
LBG Media, the digital publisher behind LADbible, claimed today its focus on the youth market leaves it in rude health.
In a tough time for companies reliant on digital advertising, LBG said it expects revenue for the year to hit £63 million. Profit on an EBITDA basis, that is before interest, taxes, depreciation and amortisation, should be £16 million.
A profit before tax figure, the more standard measure, was not given.
LBG’s websites include LADbible, SPORTbible and GAMINGbible. They have millions of readers.
The company said in a statement to the stock market: “Revenue growth has accelerated in the seasonally stronger second half and Group revenue is expected to have grown by over 20% in this period vs the prior year. There has been growth across both Direct and Indirect segments against the backdrop of a challenging economic environment.”
The shares jumped 11p to 80p, which values the business at £164 million.
BP leads FTSE 100 recovery, M&S under pressure
Commodity-focused stocks are leading the FTSE 100 index, with BP and Shell shares up 2% after Brent crude futures started the week back near $80 a barrel.
Mining giant Glencore also rose 1% or 6.7p to 537.8p as London’s top flight recovered from last week’s weakness by adding 0.4% or 27.33 points to 7359.45.
UK retail stocks came under pressure as strike action in the transport sector and rising living costs fuel investor expectations of a disappointing festive trading period.
JD Sports Fashion led the FTSE 100 fallers board with a drop of 1.55p to 116.55p and rival Frasers Group lost 7p at 728p.
Next weakened 36p to 5590p after JP Morgan placed the fashion giant on a negative catalyst watch. The City bank also lowered its price target on Marks & Spencer to 100p, a move that caused the high street retailer’s share to fall 1.5p to 117.3p in the FTSE 250.
Currys also dropped a further 2.2p to 54.7p in the wake of last week’s disappointing interim results, but Aston Martin Lagonda continued its recent recovery by adding another 1.4p to 174.9p as the FTSE 250 index stood 34.89 points higher at 18,623.37.
Lookers chairman to step down for ‘personal reasons’
Car dealership Lookers is seeking a new chairman after Ian Bull told the board he would step down “for personal reasons” on December 31, when he will have been in the role for 14 months.
The company, which has over 150 dealerships nationwide, said its senior independent director, Paul Van der Burgh, will become interim non-executive chairman.
Bull is an experienced City figure, with over three decades of experience with consumer-facing businesses, Before joining Lookers, he held a range of chief financial officer posts, at Parkdean Holidays, Ladbrokes and Greene King. He is also a senior non-executive director at Domino’s Pizza. At homewares retailer Dunelm, where Bull is also a non-exec, he chairs the audit and risk committees.
Bull said: “I am sorry to be leaving at this exciting time for Lookers, with the business trading well and continuing to perform strongly.”
London fintech Updraft raises £108 million to grow lending business
Lending firm Updraft today became the latest London fintech to ramp up its expansion plans after it completed a £108 million debt and equity raise to scale up operations.
The Old Street-based business, which combines smart algorithms, open banking and credit reference data to offer bespoke personal loans to its customers, will use the funding to add to its employee headcount, grow the number of customers it lends to and is eyeing international expansion to markets in Europe and Asia.
Aseem Munshi, CEO and Founder of Updraft, told the Standard: “We’re really excited – getting the funding in this environment was much more challenging than it was last year but our partners have been with us for a long time and they continue to invest.
Elon Musk holds poll on future as Twitter boss
Elon Musk has launched a Twitter poll asking users whether he should stay as chief executive of the social media platform.
The tycoon, who also runs Tesla and SpaceX, told his 122 million followers: “Should I step down as head… I will abide by the results.”
The poll is due to run until 11.20am and has so far attracted 14.7 million responses.
Replying to one user’s comment on the possible change in boss, Musk said “There is no successor”. He took ownership of Twitter in October.
Focus on US rates continues, FTSE 100 seen higher
Hopes that inflation pressures are easing in the US will be raised later this week, with Friday’s publication of the Federal Reserve’s preferred core PCE measure.
The Personal Consumption Expenditures price index is forecast to show month-on-month growth of 0.2% and for the annual rate to decline to 5.5% from 6.6% the previous month.
The release will be one of the key indicators of monetary policy in early 2023 after the Federal Reserve last week said the ongoing fight against inflation may result in US interest rates above 5% next year.
The hawkish tone of central bankers in Europe and US caused a sell-off for stock markets last week, but CMC Markets expects the FTSE 100 index to open 24 points higher at 7356 this morning.
Michael Hewson, CMC’s chief market analyst, said: “After a relatively benign start to the month of December we saw sharp falls in European markets last week as the fallout from Thursday’s hawkish rate pivot from the European Central Bank rippled through the market.
“These concerns were further exacerbated by additional hawkish interventions from ECB insiders doubling down on that same narrative which suggested the prospect of at least another three rate rises of 0.5% into the first quarter of 2023.”
