SEC approves Bitcoin-spot ETFs
21:46 , Simon Hunt
The US Securities and Exchange Commission has approved 11 Bitcoin-spot exchange-traded funds in a major advance for crypto adoption.
The move allows retail investors access to cryptocurrencies without having to hold them directly.
A number of firms on the approved list say they plan to launch the ETFs as soon as tomorrow.
Rajeev Bamra, SVP, Digital Finance, Moody’s Investors Service, said: “The approval of spot bitcoin ETFs by the SEC has the potential to simplify and secure Bitcoin investments for a broader investor base, which may reshape the dynamics of cryptocurrency investments.
“It could lead to substantial inflows from institutions interested in entering the cryptocurrency market as it may provide a reliable and transparent price discovery mechanism. This could result in a more stable and liquid crypto market, representing a positive development for the digital finance ecosystem.”
But Brett Hillis, Partner at Reed Smith, said: “The US is late to this party: European investors have been able to access products providing similar exposure for several years.
“However, in the UK, these products are subject to legacy restrictions that mean they cannot be offered to retail investors.
“The SEC’s move may help to provide financial regulators in Europe and elsewhere the basis to broaden access to these products to retail investors.”
FTSE 100 closes lower
16:52 , Simon Hunt
The FTSE 100 closed lower at the end of the day’s trading session in London.
Supermarkets sunk on the back of weaker-than-expected earnings at Sainsbury’s, while insurance firms Admiral and Aviva sunk on the prospect of new regulatory powers from the FCA.
Currencies held flat, but cryptocurrencies like Bitcoin sunk amid continued uncertainty over the approval of crypto ETFs.
Here’s a last look at your key market data.
Average mortgage rates falls to 4.68%: BoE
16:29 , Simon Hunt
The average 5-year fixed rate mortgage fell to 4.68% by the end of December, according to the latest data published by the Bank of England, drop of 0.2 percentage points compared to the previous month.
That rate looks set for an even steeper fall by the end of January, after several high street banks began offering sub-4% deals earlier this week.
5-year mortgages peaked at a rate of 5.71% in July.
BrewDog slashes pay for London hires despite increase in rest of UK
16:01 , Simon Hunt
BrewDog is cutting hourly pay rates for its new London hires despite upping them in the rest of the UK.
In a letter to staff, BrewDog Bars CEO James Brown said all new workers would now be paid £11.44 per hour nationwidezhe national living wage. That represents a cut of more than 4% compared to existing London staff, who are paid £11.95 per hour.
Bar staff outside London would see their pay go up by around 5% — while existing London staff would have their hourly pay frozen, a real-terms cut.
Almost all national employers pay a premium to London-based staff, to make up for higher-than-average living costs. London rent costs are more than double the UK average.
Bailey: Bitcoin ‘not taking off’
15:31 , Daniel O’Boyle
Andrew Bailey says Bitcoin is ‘not taking off’ as a financial service.
He said: “It’s not taking off as a core financial service. For example, using bitcoin as a payment service is pretty inefficient.”
“So I don’t think the integration into the financial system has kept up the momentum.
“But we have to keep a very close eye on it.”
Bailey: Big banks’ savings rates haven’t risen as fast as base rate
15:24 , Daniel O’Boyle
Asked why the UK’s top banks made record profits in the last year, Andrew Bailey said a major reason was that savings rates have not risen as quickly as the Bank Rate.
He said: “I think it’s a number of things. We have much more benign credit conditions than previously anticipated. Banks were provisioning for much larger Covid losses, and conditions turned out to be better. Banks are now adjusting to that.
“We’d obviously gone through a period where our interest rate was near zero. And the banks would typically set their deposit rates just below ours. But when our rates went to zero, banks wuld typically put their rates just above ours. With our interest rates rising, banks put them back below our rates, which led to some widening of margins.”
Breeden: China property risks ‘crystalising’, but not hitting UK so far
15:17 , Daniel O’Boyle
The Bank of England’s deputy Governor for fiscal stability Sarah Breeden says Chinese property risks are ‘crystalising’, but that this hasn’t hit UK banks yet.
“It’s clear that vulnerabilities in the Chinese property market are crystalising, and have been since mid-2021.
“What we’ve been focused on from a financial stability market is whether that will spread to the Chinese economy as a whole, or to the Hong Kong property market, where some of our banks are more exposed.
“We haven’t seen that happen yet.”
Bailey: Transport and utilities sectors could be most hit by rate rises
14:57 , Daniel O’Boyle
Bank of England Governor Andrew Bailey said transport and utilities firms might be more affected by higher interest rates.
When asked about whether companies that are highly levered, and therefore more at risk from higher interest rates, were clustered in certain sectors, he noted there were a few where this was the case.
“If you look at this country in leveraged lending, there’s transport, utilities… water companies,” he said.
Investor spend on London offices tumbles
14:46 , Joanna Bourke
The extent of how hard “evolving” workspace use trends and soaring interest rates have hit the property market has been laid bare, as figures show investor spend on central London offices plummeted by more than £5 billion last year.
Provisional data estimates purchases of City and West End offices totalled £6.9 billion in 2023. That was 46% below £12.68 billion of transactions recorded in the prior 12 months.
Read more Here
Bailey: ‘Global shocks’ still a risk
14:24 , Daniel O’Boyle
Andrew Bailey said that there is still a risk of ‘global shocks’ hitting the UK economy
He said: “The world, unfortunately, is a pretty uncertain place. So the potential of global shocks is there
“Events in the Middle East are obviously tragic from a humanitarian point of view, interesting from an economic point of view.
“Oil prices haven’t actually risen the way we thought they might have, but obviously the uncertainty is still there.”
Lunchtime update: Admiral tumbles on FCA warning
13:30 , Simon Hunt
Midway through the day’s trading session in London, the FTSE 100 is down 0.3%
Admiral is the biggest loser on the index right now, down more than 5% on the back of a warning by the FCA that insurance firms could soon face regulatory action for premium finance.
Markets are also keeping an eye out for the remarks of Bank of England Governor Andrew Bailey, who is due to appear before the Treasury Select Committee in a little under an hour.
Here’s a look at your key market data.
Marks Electrical shares dive on profit warning
13:14 , Daniel O’Boyle
Marks Electrical has seen its shares plunge after warning over profits as it suffered during the festive season amid a competitive market and as shoppers remained “highly price-conscious”.
Founder and chief executive Mark Smithson said he is “personally frustrated” that, despite record peak trading, the firm was unable to boost its profit margins as prices came under pressure.
Shares in the group plunged by more than 27% in Wednesday trading as it said the hit is now expected to see annual underlying earnings fall to between £5 million and £6 million.
This would mark a steep drop from the £7.5 million underlying earnings it notched up in 2022.
City comment: Looks like it’s Dry January for the stock market
13:01 , Simon Hunt
OK, it’s early days, but so far this year the number of companies saying they will not list their shares in London outnumbers those that will.
Irish unicorn Workhuman has apparently ruled out London after a bitter row with its private equity shareholder Intermediate Capital Group.
Meanwhile the board of travel giant Tui has recommended delisting its shares from the London stock exchange. So that’s two. At the time of writing I am not aware of any IPOs in London being announced since the start of 2024. That is a sobering statistic — it could well be a dry January for the London IPO market.
Things should get better as the year unfolds. But when? In an interview with Bloomberg this morning Erin Platts, the boss of the lender formerly known as Silicon Valley Bank UK — now HSBC Innovation Banking — said she did not see any imminent resurgence, in the tech sector at least. She thought things will start to get better in the fourth quarter, but will not be really motoring until 2025. That feels a long time for the market and its eco-system of advisers and enablers to wait.
She said there were “good conversations” going on about improving the culture and reducing red tape to make London listings more attractive, but “we are not there yet”.
There are multiple talking shops examining the new listings drought that will presumably all come up with recommendations: hopefully not contradicting each other, but who can say.
The response from the Stock Exchange and the City of London Corporation has been, and I paraphrase, “Nothing to see here. The London stock market has been going for 300 years, this is a blip and listings will return.”
Let’s hope so. Platts sees it a bit differently, pointing to a trend that goes back two decades, not 12 months. On the surface the City seems in reasonably good health, but the IPO market is both a global shop window and a litmus paper test of its appeal compared with rival centres. For now at least that is badly lacking.
Persimmon cheers housing market green shoots
11:01 , Simon Hunt
Housebuilder Persimmon today hailed green shoots in the market as easing mortgage rates boost sales after a “challenging” 2023.
The company said forward sales are 11% ahead of last year though market conditions “remain highly uncertain…particularly for first time buyers”.
The average selling price in the forward order book is £266,100 compared with £255,750 last year.
However, a trading update also underscored how hard the company was hit last year by the impact of soaring mortgage rates and the withdrawal of the Government’s Help to Buy scheme.
Persimmon completed 9,922 new homes in 2023, down a third on the previous year, but slightly better than guidance after a stronger then expected fourth quarter. Chief executive Dean Finch said Persimmon “performed well in challenging market conditions”.
Andy Murphy, director of financials & industrials at investor relations firm Edison Group, said the trading statement showed Persimmon’s “resilience”: “The previous forecast of 9,500 new home completions were surpassed, the average selling price was up by 3% to £255,750 and current forward sales was up 2% to £1.1 billion.”
FTSE 100 lower as retailers retreat, Costain and Hunting rally
10:24 , Graeme Evans
Japan’s stock market continues to outperform after the Nikkei 225 today passed the 34,000 threshold for the first time since January 1990.
It rose another 2% as the yen weakened on bets the country’s ultra-loose monetary policy is unlikely to change in the near term.
The performance also reflects AI-led momentum, with technology companies behind today’s latest strong session.
Shares in heavyweights Sony and Nintendo also rose 4%, but the mood elsewhere was more subdued as Hong Kong’s Hang Seng index closed 0.6% lower and the FTSE 100 index fell 12.23 points to 7671.73.
The lacklustre showing followed Wall Street’s jitters ahead of tomorrow’s December inflation reading and a flurry of banking sector results the next day.
In London’s top flight, Marks & Spencer and Tesco declined 1% on the eve of their trading updates while B&M European Value Retail retreated 6.2p to 560.8p after yesterday’s quarterly sales growth figure missed City hopes.
The FTSE 250 index rose 38.55 points to 19,332.57 after strong sessions for heavyweights Greggs and Persimmon.
Oil services firm Hunting improved 3% to 8.5p to 282.5p after its year-end update delivered on sales and margin targets and showed 12% order book growth in the quarter.
Among small-caps, Costain built on its strong 2023 by announcing a contract with Northumbrian Water to deliver its infrastructure upgrade programme. Costain jumped 7% or 4.7p to 67.3p as it also revealed forecast-beating levels of cash generation.
Vimto drinks firm Nichols is another stock on the front foot but guidance pointing to annual profits slightly ahead of hopes left shares 5p cheaper at 1125p.
Elsewhere on AIM, shares in online household goods retailer Marks Electrical tumbled 26% or 23.5p to 68p after it revealed significant margin pressure.
Quarterly revenues rose 17.8% to £35.1 million as the company increased market share, but with customers still highly price conscious it has warned of a material blow to full year profit guidance.
Fellow electrical retailers AO World and Currys fell 2.75p to 88.5p and 0.9p to 48.1p respectively in the FTSE 250 index.
‘We are nowhere near peak Greggs’ boasts CEO as shares leap
09:38 , Simon Hunt
The boss of Greggs today prophesied another year of bumper growth after the Newcastle-based baker closed out 2023 with a 20% jump in sales.
“We are nowhere near peak Greggs,” CEO Roisin Currie declared in an interview with the Standard.
“We have significantly more shops to open in the UK. Geographically it’s about getting to locations we don’t cover. We’re very focused on the UK – however we should always look beyond the UK to see what the opportunities are.”
Greggs said it will open up to 160 new sites in 2024, adding to the 145 net openings last year to bring its total store count to as high as 2,900.
Total sales climbed just shy of 20% to top £1.8 billion for the year, helped along by a fresh partnership with delivery firm Uber Eats which is now operational in more than one quarter of its estate.
Currie added that inflationary pressure had fallen considerably and that there were no planned price rises ahead.
Greggs shares leapt 7.5% to 2,660p, which remains below its 2023 peak of 2,904p.
Gym Group shares rise on membership growth
09:03 , Simon Hunt
Shares in the Gym Group rose 2.7% this morning after a newtiered membership structure helped the low-cost gym operator grow its customerbase.
The firm, dubbed the easyJet of Gyms, offers three levels ofmembership starting from a £13.99-a-month off-peak subscription. That has helpedaverage membership numbers grow 8% to 872,000 in 2023 while total sales grew18% to top £200 million for the first time. But final membership numbers fell backto 850,000 at year-end.
Gym Group’s net debt shrunk from £76 million to £66 millionas the company said revenue growth had offset utility-driven cost inflation andleverage is expected to remain within the range of 1.5 to 2.0x.
CEO Will Orr told the Standard: “We continue to see gooduptake of our memberships at both ends of the spectrum.
“I think there’s a lot of growth to come in the future, thefundamentals are fantastic as well as the appetite from consumers who are gettingmore well-informed about health and fitness.”
Nightcap shares surge on record December
08:44 , Daniel O’Boyle
London cocktail bar operator Nightcap saw revenue rocket to a record £7.4 million in December, its best ever month.
The strong month for the owner of Blame Gloria and The Cocktail Club meant revenue for the six months to 31 December also surged, by 40% to £32.7 million.
The group was boosted by the addition of Dirty Martini, which it bought out of administration in June.
Boss Sarah Willingham said: “I could not be prouder of the entire Nightcap team as we continue to build the UK’s leading premium bar group.
“2023 has been a volatile year, particularly in terms of the macro-economic impact on the hospitality sector.”
She said she expected growth in 2024 as lower inflation and interest cuts boost the disposable income of Nightcap customers.
Shares rocketed by 19% to 6.1p today, after tumbling in the last four months of 2023. They’re still down more than 80% from their peak in 2021.
Supermarkets under pressure in FTSE 100, Greggs jumps 9%
08:37 , Graeme Evans
Shares in Sainsbury’s have given up recent gains, dipping 4% or 12.7p to 293.2p after the retailer’s Christmas update highlighted sales pressure at Argos.
Tesco also retreated 5.9p to 294.6p ahead of its own update tomorrow, with the pair the leading fallers in another downbeat session for the FTSE 100 index.
London’s top flight lost 13.90 points to 7670.06 in a session when Marks & Spencer and BT Group also fell by around 1% and AstraZeneca dipped 66p to 10,836p.
The FTSE 250 index edged up 24.44 points to 19,318.46, assisted by Persimmon after the housebuilder rose 3% or 42p to 1433.5p following its end-of-year trading update.
Food outlet Greggs also jumped 9% or 224.55p to 2698.5p after reporting strong 2023 sales and setting out plans to open up to 160 new stores by the end of December.
FTSE 100 Llwer as Sainsbury’s fall
08:24 , Simon Hunt
The FTSE 100 is lower in the opening minutes of trade in London, led by a near-4% drop by Sainsbury’s after the supermarket group posted mixed results.
Here’s a look at your key market data.
Completions down 33% at Persimmon in 2023
08:04 , Daniel O’Boyle
New home completions tumbled by 33% at Persimmon in 2023, but the housebuilder sees signs of improvement in 2024.
Completions fell to 9,922, though average selling prices remained steady at £255,750.
Dean Finch, Group Chief Executive, said: “Persimmon performed well in challenging market conditions, delivering completions ahead of expectations in 2023 alongside enhanced quality metrics of our already five-star homes. Persimmon’s offering is resonating well with customers with sales rates relatively robust throughout the year. We have successfully balanced our need to control costs, whilst investing in the business to position it for sustainable growth when conditions improve.
“I would like to thank our colleagues, sub-contractors and suppliers for their commitment and support. Their hard work has helped ensure that Persimmon remains well positioned to serve customers across the UK who seek high quality, sustainable homes at a price they can afford.”
Looking ahead, the firm said private sales are up so far this year when compared to 2023 but “market conditions will remain highly uncertain during 2024”.
“However, mortgage rates are beginning to ease, and the response to our recent Boxing Day campaign has been positive, generating a substantial number of leads for our sales teams. Encouragingly, build costs continue to moderate which will benefit completions in 2024,” it added.
Greggs plans another 160 store openings
07:21 , Simon Hunt
Greggs has rolled into 2024 with another year of growth as the baker plans to open up to 160 new stores by the end of December.
The Newcastle-based firm, known for its steak bakes and sausage rolls, is already the largest fast-food outlet in the country with nearly 2,500 stores nationwide.
Total sales for 2023 stood at £1.8 billion, an increase of 19.6% compared with 2022. Like-for-like sales in company-managed shops were 13.7% higher than those seen in 2022.
The firm also welcomed that “inflationary pressures are reducing and with good forward cover on food, packaging and energy we anticipate a more stable cost base in the coming year.”
Pennon buys South London water supplier SES
07:21 , Daniel O’Boyle
FTSE 250 utilities firm Pennon Group has bought SES Water, which serves parts of London as well as nearby counties, from its parent company Sumisho Osaka Gas Water as it promised to improve the supplier’s ‘financial resilience’.
SES supplies water to 750,000 people in London, Surrey, West Sussex and Kent.
The purchase price is £89 million, but this implies an enterprise value of £380 million after accounting for SES’s debts.
Pennon said the deal has already been completed, but must still be approved by the CMA with Ofwat input.
Pennon boss Susan Davy said: “SES Water is a fantastic fit for Pennon as we further expand our presence in water supply across Southern England, building on our successful similar acquisitions of Bournemouth Water and Bristol Water alongside the adoption of water supply in the Isles of Scilly.
“The business is a proven, high-quality water operation. We are particularly impressed by the innovation and technology-led solutions implemented by SES Water.
“As part of the Pennon Group, we will enhance SES Water’s financial resilience and better position the business to serve its customers and all stakeholders, as has proven to be the case with our acquisitions of Bournemouth Water and Bristol Water.”
The deal comes at a time of turmoil for the water sector, which has faced criticism for the amounts of sewage that has leaked into rivers.
Sainsbury grabs market share over Xmas
07:20 , Simon English
Sainsbury’s sold a record number of pigs in blankets, mince pies and sparkling wine over Christmas as it today reported a strong festive period that lays down a challenge to rivals.
It is holding profit guidance for the full year to March at between £670 million to £700 million, at which point the three-year plan from CEO Simon Roberts will be at an end and a new strategy will be unveiled.
Since Sainsbury claims to be taking market share from all the other large grocers, investors are likely to want to keep Roberts despite some rumblings about his pay of towards £5 million last year.
Sainsbury, which is one of the biggest private sector employers with 152,000 staff, has just put £200 million into the staff pay pot to ensure all get the real living wage.
Sales rose 9.3% in the third quarter and 8.6% over the Christmas period. That dip was down to falling inflation not lower volumes of sales, it insists.
It has a price promise on 550 essential products with Aldi, not quite a complete at Asda’s pledge to price match with both Aldi and Lidl.
The grocer says its Nectar card saved customers £16 on an average £80 shop over Christmas.
The share open today at 307p – they are up 25% in the past year.
Nikkei 225 extends rally but FTSE 100 seen lower
07:17 , Graeme Evans
Leading US indices closed broadly unchanged last night as major technology stocks including Apple steadied after a poor start to the session.
The S&P 500 index finished 0.1% lower, a performance reflecting jitters ahead of tomorrow’s inflation reading and banking sector results the next day.
In Asia, Tokyo’s Nikkei 225 index extended its 33-year high with a surge of 2% but the Shanghai Composite and Hang Seng index are in negative territory.
CMC Markets expects London’s FTSE 100 index to open 18 points lower at 7666, having closed down by 10 points last night.
On futures markets, the price of Brent Crude has edged up to $78 a barrel and gold stands at $2026 an ounce.
Recap: Yesterday’s top stories
06:40 , Simon Hunt
Good morning.
UK shares floundered on Tuesday after a disappointing session for London’s top retail stocks, as new data pointed to a festive sales flop for retailers.
The FTSE 100 was trading lower, while other European indices were also in the red.
The blue-chip index was down 10.23 points, or 0.13%, to close at 7,683.96.
JD Sports, Marks & Spencer, Ocado and Kingfisher were among the day’s biggest fallers, while basic resources also lagged.
The British Retail Consortium-KPMG Retail Sales Monitor showed weak consumer confidence continued to hold back spending in December, with total sales just 1.7% higher than a year earlier.
Meanwhile, oil prices remained in focus for traders amid heightened tensions in the Middle East and concerns over supply of the commodity.
Here’s a summary of our top headlines from yesterday:
