FTSE 100 Live 20 January: Google staff layoffs, retail sales post surprise decline, consumer confidence dips

Rally for tech giants helps Wall Street’s S&P 500 rise

Opening gains for two of the biggest names in the tech sector helped New York’s S&P 500 make a modest rebound from two sessions of steeper losses.

The broad Wall Street index added just under 7 points to 3905.60, a rise of 0.2%. Shares in Google’s parent Alphabet were up by around 5% after it announced plans for 12,000 job cuts, covering around 6% of its staff.

Netflix’s return to subscriber growth helped its shares gain over 7%.

New York stocks set to tick higher after run of declines with tech stocks centre stage

Wall Street’s S&P 500 was on course for modest opening gains into the start of Friday trade which would represent a rebound from two sessions of declines.

The improving mood came after news of a convincing return to growth in subscriber numbers after Thursday’s closing bell at Netflix, which were up by almost 8 million. The online TV powerhouse also said its founder and co-CEO Reed Hastings was stepping away to become its chairman. Its shares rose almost 7% in pre-market trade.

More job cuts in the tech sector also provided a major talking point, with Google’s parent Alphabet outlining plans to cut 6% of its workforce. Its shares were up by around 3% in pre-market trade.

Overall the broad New York stock index was expected to rise 13 points to 3928.0, a bounce of 0.3%.

FTSE 100 midday movers: Hargreaves lands down at the bottom of the market

Fund manager Hargreaves Lansdown made the biggest single loss on the FTSE 100 after a broker downgrade for the stock. Analysts at Jeffries cut their rating on the shares to “underperform” amid wider concern about a slowdown in the sector. Rising interest rates mean it is easier for investors to get returns from cheaper and less risky homes for their money.

Investment trust 3i bucked the trend, but only with its shares bouncing back from a drop over the previous session, although it was enough to take it to the top of the leaderboard.

Google axes 12,000 jobs

Google parent company Alphabet is eliminating 12,000 jobs, its chief executive said, according to a staff memo seen by the Reuters news agency.

The search engine giant has become the latest major US tech company to let go of staff after Microsoft said it was laying off 10,000 employees earlier this week and Amazon said it was cutting 18,000 jobs earlier in January.

There have been close to 40,000 tech layoffs since the start of the year, according to redundancy tracking site layoffs.fyi.

Google has 5,701 staff in the UK, according to its most recent filing with Companies House. Its parent company, Alphabet, had 186,779 staff worldwide according to its most recent filing with the US securities regulator.

SSE raises profit guidance, FTSE 100 higher

SSE lifted City profit expectations today after seeing its gas-fired generation plants deliver a big jump in output at a time of sky-high prices.

The energy giant, whose fleet of gas-fired plants includes the Medway power station on the Isle of Grain in Kent, said the 27% increase in production for the nine months to 31 December ensured security of supply for customers.

The performance more than offset a 10% decline in renewables output after unseasonably dry and calm weather affected its fleet of wind farms and hydro electric plants.

SSE shares rose 2% or 29p to 1731p in the FTSE 100 as it said earnings for the year to March will now top 150p a share, a big jump from the previous guidance of at least 120p.

It pointed out it would deliver record investment in 2022/23, with expenditure expected to be over £2.5 billion. Finance director Gregor Alexander added that SSE is performing well in a “shifting and volatile” energy landscape.

He said: “We are responding to the cost of living and energy crises by investing record amounts and remain committed to investing additional profit we make into critical low-carbon electricity infrastructure.”

SSE’s earnings update boosted interest across the sector, with British Gas owner Centrica near its highest level in over two years after shares rose another 0.3p at 97.9p.

The wider FTSE 100 index cheered 32.55 points to 7779.84 in a calmer session for investors after yesterday’s 1.1% slide.

The UK-led FTSE 250 index recovered 0.4% or 74.31 points to 19,648.42, with corporate merchandise firm 4imprint one of the biggest risers following a top-end profit forecast. Shares jumped 3% or 131.25p to 4606.25p

Spirent Communications slumped 16% or 43.6p to 233.8p after the provider of 5G testing services said its performance would be weighted towards the second half of 2023 as some customers have delayed investment divisions.

Meanwhile, maternity wear group Seraphine is poised to leave the stock market after just 18 months. It listed in July 2021 at a price of 295p a share, but after a challenging period of trading has recommended shareholders accept a 30p a share offer from its largest shareholder Mayfair Equity Partners. The 200% bid premium sent shares up 19.25p.

Netflix CEO Reed Hastings says it’s time to step away

The co-founder of Netflix has stepped down as CEO after the company posted an uptick in subscribers.

Reed Hastings, 62, who founded the business in 1997, will be stepping into an Executive Chair role, to be replaced by current co-CEO Ted Sarandos and COO Greg Peters, who were promoted to their roles in 2020.

He said in a statement: “The board and I believe it is the right time to complete my succession.

“It was a baptism of fire, given Covid and recent challenges within our business…but they’ve both managed incredibly well.”

The firm reported a 7.7 million uptick in subscribers in the fourth quarter, helping push shares up 6.1% to $335 in pre-market trading. Earnings per share of 12 cents came in well behind the 45 cents analysts had estimated, according to Refinitiv data.

Hastings controls a 2% stake in Netflix and has a net worth of $3.3 billion (£2.7 billion) according to an estimate by Forbes.

Jamie Dimon cashed in — again

Jamie Dimon is regarded as perhaps the most powerful banker in the world.

The JP Morgan boss is certainly one of the best paid. He recevied $34.5 million in 2022, the bank reveals.

That is the same as his pay a year earlier. There is also a possible $50 million earn out for him if he stays at JPM long enough.

That award has caused some anger among investors. A majority of them voted against the $50 million deal at the annual meeting in May 2022.

The bank said it won’t give Dimon, 66, any more special awards.

JPM’s profits were down 22% to $37.7 billion this year due to a slump in fees from investment banking.

Close Brothers takes hit on bad loans

CLOSE Brothers, the City merchant bank founded 145 years ago, was hit with a double whammy today as it revealed a £90 million set aside for bad loans and sluggish share trading.

Novitas, the legal-finance specialist it acquired in 2017, was closed to new loans in 2021.

Today Close put £90 million into a pot to cover Novitas loans that are going bad. Profit from Novitas this year will fall from £36 million to just £8 million.

The shares fell 120p, 12%, to 928p.

Chief executive Adrian Sainsbury said: “. The financial strength of the group leaves us well placed to absorb the anticipated additional provisions and to continue to deliver on our long-term track record of disciplined growth and returns to shareholders”.

Winterflood’s, the share trading and market making arm, has its own problems.

Performance has been “adversely impacted by the continued market-wide slowdown in trading activity in higher margin sectors”.

Other brokers have reported similar moves, indicating a wider City slowdown that is already leading to job losses.

Close Brothers employs 4,000 in the UK, many at offices near Liverpool Street.

Genesis collapse adds to crypto industry woes

The continued downfall of the crypto industry showed no signs of abating today after one of its largest lenders collapsed.

Genesis Global Capital, the lending arm of crypto business Genesis, has filed for Chapter 11 bankruptcy in New York after failing to raise enough capital to swerve a liquidity crisis.

It had assets and liabilities in the range of $1 billion and $10 billion, according to documents filed with the Southern District of New York, with at least $2.8 billion of active loans, according to the company’s website, sending shockwaves through the industry and raising concerns over the health of other industry players exposed to the company.

Interim CEO Derar Islim said in a statement: “While we have made significant progress refining our business plans to remedy liquidity issues caused by the recent extraordinary challenges in our industry…an in-court restructuring presents the most effective avenue through which to preserve assets and create the best possible outcome for all Genesis stakeholders.”

The firm forms part of the empire of billionaire Barry Silbert known as the Digital Currency Group, or DCG, which also operates asset manager Grayscale, that controls billions of dollars worth of crypto assets, as well as crypto news site CoinDesk.

Silbert is worth $3.2 billion (£2.6 billion) according to an estimate by Forbes.

FTSE 100 steadies, Spirent shares drop 12%

The London market has recouped some of yesterday’s losses, with the FTSE 100 index up 30.77 points to 7778.06 and the FTSE 250 index 33.45 points higher at 19,607.45.

Renewables giant SSE led the top flight after it upgraded earnings expectations to more than 150p a share, compared with previous guidance of at least 120p a share. The shares rose 33p to 1734p.

The fallers board was led by investment platform Hargreaves Lansdown after a decline of 3%, while consumer-focused stocks Diageo, Unilever and bottling company Coca-Cola HBC lost around 1%.

Today’s strong update by corporate merchandise firm 4imprint sent its shares 4% higher in the FTSE 250 index, but Spirent Communications dropped 12% as the provider of testing and analytics said some customers had delayed investment divisions.