FTSE 100 Live 26 July: NatWest boss quits, Lloyds posts results as GSK and Rolls-Royce upgrade
No recession and lower rates on way, predicts mortgage giant Lloyds Bank
Britain’s biggest mortgage lender offered hope to the nation’s homeowners today and predicted the UK will no longer fall into recession next year.
Lloyds Banking Group said Bank of England interest rates should peak at 5.5% — far below the 7% some in the City were fearing just weeks ago.
It also predicts the economy will grow slightly this year, and that unemployment will stay low, a helpful view from an organisation with as much financial data as any company in the country.
Just Eat boss: We’re ready to take drivers off the street amid sweltering heat
The boss of Just Eat has said the food delivery firm is braced to take drivers off the street as heatwaves and wildfires sweep across southern Europe.
Temperatures soared past 40 degrees Celsius in parts of Greece yesterday, as thousands were evacuated from their homes amid raging fires. Temperatures have reached as high as 47 degrees in in Italy and 39 degrees in Spain recent days.
Just Eat boss Jitse Groen said: “If weather conditions are dangerous to our staff we don’t send them out on the streets.
“We have the regular labour inspection rules to think about [and] we take these cues from government.”
Just Eat posted a 18% slump in sales in southern Europe in the first six months of the year, which the firm said was part of a “return to pre-pandemic seasonal ordering patterns.” Sales in northern Europe faired better, with turnover up 10% and a jump in profitability to 191 million euros (£164 million).
Orders in the UK fell 9% to 121 million, while revenues slipped 4% to 629 million, which it put down to targeted promotional campaigns offering reduced delivery fees.
But the firm said the UK and Ireland showed signs of being able to hit the same level of profitability as northern Europe. Just Eat shares rose 7.3% to 1,480p.
Groen said food inflation at restaurants in the UK had been significantly lower than supermarket price rises, and was broadly in line with the rest of northern Europe.
The Just Eat app on a smartphone
/ PA ArchiveMarket snapshot as shares slip
Blue-chip shares have dipped slightly after a steady opening. Take a look at our market snapshot below.
Mortgage rates rise again as lenders put products back on market
Mortgage rates have risen further, as two-year deals get closer to 7%, following a week of easing.
Increases in rates had largely stopped over the past week, following long-awaited good news on inflation. However, rates appeared to be on their way back up today..
That coes despite HSBC yesterday being the first major lender to lower its mortgage rates.
The average 2-year fixed residential mortgage rate is now 6.86%, up from 6.83% yesterday.
The average 5-year fixed residential mortgage rate today is 6.36%, up from 6.34%.
The increase comes thanks to a flood of products being brought back onto the market, with 250 more products available today than yesterday.
Sun shines on Marstons as sales grow 11%
The boss of Marstons has said that Brits are increasingly looking to the premium end of the menu when they do out for a drink.
Like-for-like sales rose 10.9% in the 16 weeks to 22 July compared to the previous year, spurred by warm June weather helping pack beer gardens, a trend which trailed off heading into a cooler, wetter July.
Marston’s boss Andrew Andrea said: “The key thing that’s surprising us is that when people go out they want a good experience and they are not trading down to the cheapest options.
“The sunshine lagers like San Miguel and Birra Moretti continue to perform very well and we are seeing a bit more trading up into the premium burgers.”
Marstons shares rose 3.2% to 33p.
(Carlsberg Marston’s Brewing Company/PA)
/ PA MediaTottenham owner Joe Lewis indicted in the US over alleged insider trading
Tottenham owner Joe Lewis has been indicted in the US for “orchestrating a brazen insider training scheme”.
US Attorney Damian Williams announced the charges late on Tuesday night via a video posted on Twitter.
The Southern District of New York have indicted Lewis and accused the 86-year-old billionaire of “classic corporate corruption”.
Rolls-Royce shares surge, NatWest down 3%
Rolls-Royce shares have jumped 24%, up 36.5p to 189.1p, after a huge upgrade to City forecasts. The stock was 66p last October.
GSK also increased 2023 guidance but the reaction in the City was measured as shares in the drugs giant only rose 1% or 16.2p to 1409.2p.
In the banking sector, Lloyds Banking Group dropped 2% or 1.25p to 44.8p after its results and NatWest fell 3% or 7.4p to 243.8p following last night’s departure of CEO Alison Rose.
The FTSE 100 index dipped 10.63 points to 7681.17, with Rio Tinto down 2% after its interim results. Among other companies reporting today, British American Tobacco rose 42.5p to 26767.5p but Reckitt Benckiser dropped 140p to 5802p.
The FTSE 250 index lifted 8.33 points at 19,158.21, with Aston Martin Lagonda up another 6% or 20.4p to 360.6p after half-year results.
City AM set to announce new buyer today
City AM is set to announce a sale today to an unnamed UK-based group, with new buyers coming in just in time to fend off administration for the London freesheet, managing director Lawson Muncaster confirmed to the Standard today.
According to Sky News, the new buyer could be ecommerce business THG, whose founder Matthew Moulding has been openly critical of press coverage of his business in the past.
Reports emerged last night that the newspaper – distributed across the City and Canary Wharf, as well as major transport hubs – was preparing to appoint BDO as administrator, weeks after putting itself up for sale.
But managing director and co-founder Lawson Muncaster told the Standard that a buyer was found in time to prevent administration. The new group is UK-based and not a direct part of the media sector, but does already have some involvement in the space.
Rio Tinto earning down by a quarter to $12 billion in the first half
Global mining giant Rio Tinto – closely watched for the insight it can offer into the health of the global economy through the metals it produced – reported a sharp drop in earnings today, as metal prices stayed lower year-on-year.
Earnings fell 25% to almost £12 billion for the first half of the year, as higher iron ore volumes offset a 14% fall in average average monthly prices.
It also reported weaker demand for aluminium, which was “partly offset” by “a recovery in demand in China”.
Copper output also fell, and revenue from the metal dropped 2% to just under $3.5 billion.
New Rolls-Royce boss hikes profit guidance
The rebuilding of Rolls-Royce under new boss Tufan Erginbilgic is making faster than expected progress after the engines giant delivered a big boost to profit guidance today.
It said first-half underlying operating profit will be between £660 million and £680 million, much higher than the City’s consensus estimate of £328 million. This includes a return to profit in civil aerospace, with a surplus in the region of £400 million.
The company’s key metric of free cash flow is due to be £340 million to £360 million, much better than the £50 million forecast. Rolls said this reflected continued growth in its end-markets and a focus on commercial optimisation and cost efficiencies.
Full year guidance has been raised, with Rolls now expecting an operating profit of £1.2 billion to £1.4 billion compared with the consensus £934 million. Free cash flow will be as much as £1 billion.
Erginbilgic said the early impact of the transformation programme had been seen in all divisions, despite a challenging external environment and supply chain constraints.
He added: “Better profit and cash generation reflects greater productivity, efficiency and improved commercial outcomes.”
