The shock resignation of one of the UK’s most influential captains of industry was the main talking point on London’s stock market today, as the FTSE 100 held steady overall.
Shares in BP took a hit after the sudden departure of its CEO grabbed the headlines. The UK’s fifth most valuable company said Bernard Looney would leave the £10 million-a-year job with immediate effect after he “was not fully transparent” over “personal relationships with company colleagues”.
Looney was in charge for under four years, having spent his entire career at BP. He was at the helm when it reported record annual earnings of £23 billion for 2022, after Vladimir Putin’s invasion of Ukraine sent oil and gas prices soaring.
BP’s stock headed in the other direction today, falling more than 6p to 516p, a drop of 1.2%, despite rising oil prices on commodities markets.
Meanwhile insurer Aviva announced the $1 billion (£800 million) sale of its Singlife joint venture to Sumitomo Life of Japan
The move will help the insurer simplify its business and focus on the UK, Ireland and Canada. Aviva’s shares rose 7p to 383p.
Overall, the FTSE 100 slipped slightly this morning amid weak GDP numbers.
In the US, inflation ticked slightly up, while UK chip maker Arm’s IPO is set to begin.
FTSE closes down 1.5 points
16:39 , Daniel O'Boyle
The FTSE 100 closed almost exactly where it started today, finishing down 1.5 points at 7,525.99 despite worse-than-expected GDp figures.
Aviva was the top riser after selling an £800 million stake in Singapore Life, while the ever-volatile Ocado was the biggest faller.
BP closed down 2.7%, second on the fallers’ board, in the first day of trading after Brendan looney’s shock departure.
The next recession may have already begun
16:08 , Daniel O'Boyle
“If the UK economy soon slips into recession, we will likely gesture vaguely at summer – such as it was – for when the contraction began,” Jack Kessler writes. “GDP shrank by 0.5 per cent in July, the sharpest decline since December, with services, production and construction all shrinking.
“To a large extent, this is the medicine working. The Bank of England has raised interest rates 14 consecutive times, from a historical low of 0.1 per cent in December 2021 to 5.25 per cent today – all in the name of price stability and returning to the 2 per cent inflation target.
“That is, of course, little comfort for borrowers stung by higher repayments or a Conservative Party facing the prospect of seeking a fifth successive term amid a recession.”
What investors are watching ahead of Arm IPO
15:58 , Daniel O'Boyle
Trading of shares in British chip designer Arm begins tomorrow. City eyes will be closely watching stock price moves for the most hotly anticipated tech IPO of the year following the firm’s decision to close its order book early after being oversubscribed by a factor of ten.
Arm’s target price range has shifted around somewhat in recent weeks, in signs it is proving difficult to price a big tech company amid a slump in listings.
Owner SoftBank had been eyeing a valuation of $60-70 billion for it earlier this year, before setting Arm’s IPO price at $47-51 a share last week, giving it a significantly lower market value of $54.5 billion. But it now looks set to price at the top end of that range or higher still.
James Ashton, former business editor of the Standard and author of The Everything Blueprint, which chronicles the history of Arm, said: “You would imagine with 28 banks on the ticket this company would sell well.”
Investor concerns ahead of Arm IPO
15:41 , Simon Hunt
The rise of chip technology in China could be raising Arm investor concerns. A new chip built into Huawei’s latest smartphone, unveiled last week suggested China’s domestic chip-making capabilities were more advanced than previously thought.
“The most well-documented challenge the complicated ownership structure for Arm China,” Ashton said.
“Arm has done very well in China and its architecture has underpinned a lot of Chinese-designed chips. But all tech companies cite the concern that the Chinese will find a way of learning from your tech and designing it for themselves.”
Finally, there’s the question of how Arm’s strategy might change when it becomes public.
Charles Sturman, chair of the Semiconductor Leadership Group and a former employee of Acorn, a now-defunct computer company which co-founded Arm in 1990, said the chip designer’s future growth could depend on how it works its new shareholders as a listed company.
“The important thing for Arm is it has to remain neutral,” he said.
“The major shareholders are going to be some of Arm’s major customers. Other companies are going to be put off if they perceive Arm is prioritising one customer that has shares in it.”
BP ‘turtle’ out of the company he loved after relationships with staff
15:09 , Daniel O'Boyle
Bernard Looney was the last of a line of high flying BP super execs nicknamed “the Turtles” after the Teenage Mutant Ninja Turtles. They were young and ambitious “lifers” mentored by a former CEO John Browne and whose dizzying ascent up the greasy pole took them all the way to the boardroom.
But just as Browne’s BP career ended in ruins in 2007 when it emerged he had lied to a court about his relationship with a man, now Bernard Looney finds himself wondering where it all went wrong.
The 53-year-old lost the job he loved last night working for the only company that had ever employed him – apart from the family farm in Ireland – in the most brutal of circumstances after admitting he had not been fully candid with the board about past relationships with colleagues.
See how BP’s share price changed under Bernard Looney
14:54 , Daniel O'Boyle
Ride-hailing app Freenow offers drivers ‘breakthrough’ choice of employment status
14:46 , Daniel O'Boyle
Drivers on one of Europe’s biggest minicab networks will be able to choose whether to become a worker or remain self-employed in a breakthrough for modern-day working practices.
Freenow, which allows passengers to book a cab via its smartphone app, hopes the move will boost the recruitment and retention of drivers – and make it easier for Londoners to book a cab.
It comes after rival operator Uber lost a Supreme Court case in 2021 in which it had argued its drivers were not workers but self-employed independent contractors with fewer rights. Workers are entitled to the minimum wage and paid holidays.
US inflation rises
14:11 , Daniel O'Boyle
Inflation in the US rose to 3.7%, slightly ahead of expectations, as the world’s largest economy’s battle with rising prices is still not quite over.
The rate of inflation in the US had fallen dramatically for much of this year, but has picked up again in recent months, with the prace of price rises still above the 2% target.
Hugh Grieves, fund manager, Premier Miton US Opportunities Fund, said: “On the surface the headline inflation rate ticked higher for the second month in a row, but the Federal Reserve will be relieved to see core inflation continue to decline.
“The worry for the Fed will be that higher energy costs start spreading into the wider economy, raising the risk of core inflation reigniting towards the end of the year and forcing central banks to begin raising rates once more.”
UK in ‘low growth trap'
13:07 , Daniel O'Boyle
Muniya Barua, deputy chief executive at BusinessLDN, said the latest GDp figures show the UK economy is in a “low growth grap”.
“The economy is in reverse gear and the UK is stuck in a low-growth trap,” Barua said. “With the Chancellor confirming there isn’t room for big giveaways in the Autumn Statement, it’s time to get creative on growth enhancing measures.
“Reversing the decision to end VAT-free shopping for international tourists would give the high street and economy a much-needed boost. The Government must also free up the labour market with more action on childcare by reducing the cost and increasing the availability of quality provision.
“Finally, rail strikes mean the capital is regularly grinding to a halt, so there must be renewed negotiating effort to break the current deadlock.”
Clothing giant Inditex records higher sales
11:46 , Joanna Bourke
Inditex, the world’s biggest fashion retailer behind chains such as Zara, Massimo Dutti and Bershka, today continued a “hot streak” and revealed first half sales jumped 13.5% to reach €16.9 billion (£14.6 billion).
The Spanish clothing giant said between February and July 31 Spring/Summer collections were “very well received” by customers, and sales were positive in all regions it operates in. It added that gross profit increased 14.1% to €9.8 billion.
Growth at the firm, which has around 5,745 stores, comes despite the cost of living crisis which has hurt some other High Street brands.
Read more HERE.
Barbenheimer blockbusters save economy from even worse GDP dive
10:58 , Daniel O'Boyle
The Barbenheimer summer cinema bonanza saved the economy from an even deeper slump in July when GDP dropped a chunky 0.5%, official figures revealed today.
The sports activities and amusement and recreation activities sector surged 12.4% in the month, Analysts said the much hyped shared release of the Barbie and Oppenheimer movies on July 21 in a week of heavy rain was a welcome boost to the economy.
The UK box office took £160 million in July, up 78% on June and 27% ahead of July 2022.Just two weeks after release Barbie had raked in £59.6 million, overtaking The Super Mario Bros Movie to become the biggest release of the year so far. Christopher Nolan’s Oppenheimer took £33.7 million.
Key market data as FTSE 100 dips slightly
10:43 , Daniel O'Boyle
Take a look at today’s market snapshot
BP shares shrug off shock boss departure, but attention turns to successor
BP has seen its shares weather the storm caused by the shock departure of boss Bernard Looney after he admitted failing to disclose the extent of past relationships with colleagues.
Shares in the FTSE 100 oil giant dropped as much as 1.8% after the London market opened on Wednesday, but soon pared back losses to edge around 0.4% lower in morning trading.
Mr Looney resigned on Tuesday night after the group said he accepted not being “fully transparent” in his previous disclosures.
The Irishman, 53, is being replaced on an interim basis by the group’s chief financial officer, Murray Auchincloss.
Online sales help get Hornby back on track
10:03 , Daniel O'Boyle
Online sales helped model railway maker Hornby get back on track this summer after a disastrous performance a year earlier.
Hornby said sales and margins in the five months to 31 August had been better than in 2022 as internet sales grew by a third, and that it expects to achieve “low double-digit” revenue growth for the 2023-24 financial year.
The improvement will be a major relief to investors after the business struggled in the year to 31 March, swinging to a £5.9 million loss.
Hornby noted that its full-year performance ultimately depended on how it performs in the lead-up to Christmas. But it said sales could continue to pick up steam as the year goes on after appointing a new sales director in August.
CAB charts course for global expansion
09:43 , Simon Hunt
London’s newest listed fintech today laid out bold plans for its global expansion after it reported a more than doubling in profits.
CAB Payments, which joined the London Stock Exchange in June, said it was preparing to submit applications to the New York-based Federal Reserve Bank to operate in the US as well as opening a Netherlands office to seek an EU payments license as it added more than 100 employees to its headcount.
Pre-tax profits in the first half of the year shot up 112% to £23.8 million, while total income rocketed 94% to £71.8 million.
Newly-appointed chair Ann Cairns, a former executive vice chair of Mastercard, said: “We are pursuing a growth agenda; our market is expected to grow rapidly, and our business is intent on gaining share.”
CAB shares climbed 6.7% to 280p, but that remains down on it 335p IPO price.
TeamViewer expects €50 million more in profit as Man United deal cut short
09:25 , Daniel O'Boyle
Remote computer access firm TeamViewer said it would save more than €50 million (£43 million) as Manchester United set out plans to cut short its front-of-shirt sponsorship deal with the German business.
TeamViewer had initially been set to be the club’s main sponsor until 2026.
But United said last night it would end the sponsorship early to put chip maker Snapdragon on the front of its shirts instead from the start of next season, after having revealed at the end of 2022 it was looking for new partners.
This morning, TeamViewer said it expects the early termination of the deal to offer a major boost to its profits. It expects to make €17.5 million more in 2024, when its logo will appear on Man United shirts for half of the calendar year, and an extra €35 million in 2025.
The firm also pointed out that it will still advertise on hoardings at Old Trafford and the club’s digital channels.
Shares of TeamViewer rose by 1.6% to €16.26 this morning in Frankfurt. They have risen by more than 60% in the last year.
BP shares fall after sudden departure of CEO Bernard Looney
09:15 , Michael Hunter
Shares in BP were under pressure in morning trade after the oil major confirmed the departure of its chief executive.
Bernard Looney “was not fully transparent” over “personal relationships with company colleagues” the company said in a statement today.
BP has looked into anonymous allegations that Looney had what it called “ a small number of historical relationships with colleagues prior to becoming CEO” and found that “no breach of the company’s code of conduct”.
But after “further allegations of a similar nature” received recently, it found Looney “did not provide details of all relationships”.
One of the best-known and highest paid CEOs on the FTSE 100, Looney’s sudden departure comes after less than four years in the £10-million a year job.
BP’s stock fell over 6p to 516p, a drop of over 1%.
Retailers and consumer stocks in retreat as FTSE 100 slips after economy shrinks in July
08:39 , Michael Hunter
London’s main stock market index slipped back in early trade, with retailers under pressure after economic data showed the economy shrank in July as wet summer weather and rising interest rates kept consumers quiet.
Some big high street names and other major retailers stood out. Ocado, the online grocer, was the biggest single faller, down 18p to 783p. JD Sports was over 2p softer at 138p.
Overall, the FTSE 100 fell 13 points to 7,514.70.
There were also notable falls for companies exposed to consumer spending on the FTSE 250. The mid-cap index is seen as as more representative of the domestic UK economy. It fell 44 points to 18497.89. Dominos Pizza lost 7p to 389p. JD Wetherspoon eased back by 7p to 693p.
Market snapshot as pound falls further
08:39 , Daniel O'Boyle
The pound has fallen further below $1.25 on the latest GDP figures, while the FTSE is slightly lower.
Take a look at our full market snapshot
GDP decline ‘more than strikes and weather'
08:18 , Daniel O'Boyle
Paul Dales, chief UK economist at Capital Economics, said that while strikes and bad weather explain the hit to public sector output and retail, they do not explain the entirety of the weak figures.
“There is an air of underlying weakness,” he said. “That would make sense given that the dampening effect of higher interest rates should be starting to be felt a bit harder now and when other indicators, such as the activity PMIs which exclude the drag on public sector activity from strikes, are also pointing to recession.
“These data suggest GDP growth in Q3 as a whole is likely to fall well short of the Bank of England’s +0.4% q/q forecast. Even so, the strength of wage growth and the stickiness of core inflation (next update on this due next Wednesday) suggests to us the Bank will pull the interest rate trigger once more at the policy meeting next Thursday.”
Decline in full-year completions at Redrow
07:34 , Joanna Bourke
The cost of living crisis and mortgage affordability continue to have a negative impact on the housing market, builder Redrow said as it revealed a decline in full-year completions.
The UK homebuilder, which has a major site in Colindale and mainly focuses on family homes predominantly in the south and south east, completed on 5436 sales in the year to July 2. That was 5% lower than the prior 12 months.
It managed to keep revenue steady at £2.13 billion but underlying pre-tax profit was 4% lower at £395 million.
The industry has seen demand take a hit as the cost of living crisis and high interest rates pile pressure on buyers. The end of the Help to Buy scheme has also made affordability even harder for some borrowers.
Redrow signalled that headwinds are continuing, and said the sales market over the summer was challenging, and sales per outlet for the first 10 weeks of the new financial year were 0.34, down from 0.61.
For the current financial year to July 2024 Redrow is guiding revenue will be in the region of £1.65 billion to £1.7 billion
FTSE 100 expected to fall after UK economy shrinks in July
07:22 , Michael Hunter
The FTSE 100 is expected to fall in opening trade, after bleak GDP data for July knocked the mood.
The wider impact on the UK economy from the Bank of England’s long run of rate rises was a talking point as the value of all the goods and services produced by the country in July fell by 0.5% from the previous month. It was the biggest fall since December 2022. It had been expected to slip by 0.2%. Year-on-year, it flatlined.
Spreadbetters expect the main London stock market index to fall by around 30 points to 7524 points. There are falls of similar margins expected on European bourses.
Shallow recession ‘increasingly likely’ as UK economy shrinks by 0.5% in July
07:13 , Daniel O'Boyle
Jeremy Batstone-Carr, European strategist at Raymond James Investment Services, warned of the possibiliuty of recession after the latest GDP figures
He said: “Today’s GDP drop of 0.5% provides further evidence that the UK economy’s resilience is starting to wane and suggests a shallow recession is increasingly likely over the remainder of the year.
“All sectors of the economy have started the third quarter under pressure, with the service and retail sectors particularly hard hit due to an unusually wet July.. On top of this, the lagged impact of earlier interest rate hikes are being felt throughout the economy. If banks continue to curtail credit and withdraw lending, the economy will fail to gain any real traction. The Bank of England should be careful of further rate hikes with this in mind.”
UK GDP shrinks by 0.5%
07:01 , Daniel O'Boyle
UK GDP fell by 0.5% in July, faster than expected, as bad weather held the economy back.
A decline had been widely expected, with economists projecting GDP to shrink by 0.2%.
The contraction, combined with early indictators suggesting further weakness in August, may put the UK on watch for a possible recession to end 2023, which is typically defined as back-to-back quarters of shrinking GDP.
Morning refresh: What you need to know to start the day
Tuesday 12 September 2023 22:20 , Simon Hunt
Good morning from the City desk of the Evening Standard.
The FTSE 100 unexpectedly lost another one of its CEOs last night. The news hit our inboxes shortly before 8pm that BP boss Bernard Looney had quit the firm over ‘relationships with colleagues’.
The oil supermajor said it had investigated his past relationships with colleagues, initially finding no breach of its code of conduct, but further claims emerged, which prompted Looney to admit he had not been fully transparent with the board.
Across the pond, Apple finally caved under EU pressure and ditched its bespoke lightening port on its new iPhones in favour of the USB-C connection already used by Samsung and Google, which it conceded “has become a universally accepted standard.” See more key announcements from the US tech giant here.
Here’s a summary of our other top headlines from yesterday:
Pressure grows on Bank for another rate hike as total wages rise by 8.5% boosted by one off payments to NHS workers and civil servants. Vacancies below 1 million for first time in two years
Fevertree first half profits almost wiped out by rising glass costs and warns that summer sales by poor summer weather
Sunak plans to make UK a crypto hub paying off as United Kingdom is the only country in western Europe to feature in the top 20 for crypto adoption
Today we’re expecting results from Tullow Oil. Over in the US, in the afternoon we’ll get the full picture on Arm’s IPO price range before shares begin trading tomorrow.