London’s FTSE 100 re-took the 7500-point mark helped by rallying banks as investors absorb jobs and wages data into the Bank of England’s next rate call later this month.
Wages including bonuses in the UK rocketed by 8.5% year-on-year, ahead of expectations again. Excluding bonsues wages rose by 7.8% as expected.
Unemployment ticked up to 4.3%.
Mining stocks cooled after the previous day’s rally, while defensive sectors fell back in line with an upbeat feel to trade as the rally entered its fourth consecutive trading day,
Shock as BP boss quits
Tuesday 12 September 2023 20:43 , Daniel O'Boyle
BP boss Bernard Looney has quit with immediate effect in a shock to the City after admitting he was not “fully transparent” in his disclosures about past relationships with colleagues.
The Irishman, 53, took the role as chief executive of the oil giant in February 2020, pledging the company would become carbon neutral by the middle of the century.
He has now stepped down, and BP’s chief financial officer Murray Auchincloss will take over the role on an interim basis.
FTSE closes at 7,527.53
Tuesday 12 September 2023 16:37 , Daniel O'Boyle
The FTSE 100 closed ahead for the day at 7,527.53, up 0.4%, as City traders became more confident that the Bank of England’s next interesdt rate rise could be the last.
Primark owner AB Foods was the top riser after it upped its guidance on the back of strong results. On the other hand, Smurfit Kappa topped the fallers board as full details of its US mega-merger were released.
City Comment: The size of the mortgage mountain might just keep shrinking
Tuesday 12 September 2023 16:28 , Daniel O'Boyle
In the great line-up of British financial statistics there are some numbers, such as the national debt, that can be guaranteed to go one way — upwards — pretty much every month.
The total value of outstanding residential mortgages is another of those. So what do we make of today’s eye-catching reveal from the Bank of England?
Not only did the total drop in the second quarter, but it fell by more than it ever has done before, or more accurately, since record began in 2007.
US snapshot: Nasdaq lower ahead of Apple launch event
Tuesday 12 September 2023 15:47 , Daniel O'Boyle
The unveiling of the iPhone 15 later today failed to stoke interest in US tech stocks, as the Nasdaq fell in the first hour of trading in New York.
Apple’s own shares are down 1.5%.
Take a look at our full market snapshot.
Boom in leisure brands bringing tech to create an interactive high street
Tuesday 12 September 2023 15:43 , Daniel O'Boyle
Walk into the former TopShop in Enfield town and it is hard to believe that the space was once a conventional London high street fashion emporium.
Where there were previously racks and shelves displaying Sir Philip Green’s latest offerings there are escape rooms, VR headsets, huge game screens and an air hockey table. The 1980s-style sign that greets you on entry in garish neon pink proclaims “this must be the place”.
The startling transformation of this north London “Centre VR” branch is symbolic of an exploding trend across the capital: experiential interactive leisure sites, many packed to the rafters with tech, are where the action is happening right now.
From a quiet evening of axe throwing to an immersive life-size version of Monopoly, London workers and tourists are seeking new ways to socialise and there are scores of businesses looking to satisfy this growing appetite.
Poundland to buy 71 Wilko shops and rebrand them under its own name
Tuesday 12 September 2023 15:14 , Daniel O'Boyle
Poundland will buy 71 Wilko shops from administrators, and rebrand them under its own name, a day after it was revealed that all shops were set to close.
The discount retailer is not able to guarantee that all jobs at these locations will be saved, but said it would “prioritise” the recruitment of ex-Wilko staff.
The leases for the shops are expected to transfer to Poundland in the “early autumn”, adding to the almost 800 existing Poundland shops.
The shops are “largely in locations in which [Poundland[ has limited presence”.
City Voices: Time to unleash British business
Tuesday 12 September 2023 15:02
British businesses have had a difficult 18 months. Ever since Russia invaded Ukraine, they have had to deal with a tsunami of economic headwinds – with rising energy costs, inflation and interest rates combined with unfavourable capital markets, making it hard for companies to either successfully IPO or raise money using shares.
But there’s a strong culture of entrepreneurialism and innovation in the UK, which hasn’t gone away.
With signs of some green shoots emerging, what business needs is support and investment soambitious companies can capitalise on the opportunities that are presenting themselves.
Market snapshot as stocks hold onto gains
Tuesday 12 September 2023 14:19 , Daniel O'Boyle
Take a look at the latest market snapshot as the FTSE 100 remains ahead
What does record wages growth mean for me and for the UK economy?
Tuesday 12 September 2023 14:05 , Daniel O'Boyle
Under-pressure households were offered some welcome cheer after official figures showed wage growth finally caught up with price rises after nearly two years of seeing earnings outstripped by inflation.
The Office for National Statistics (ONS) reported that average regular weekly earnings growth remained at 7.8% in the three months to July, the highest since comparable records began in 2001.
This meant that so-called real wages were flat over the quarter – marking the first time they have not fallen since October 2021.
Inflation could overshoot forecasts, says incoming deputy Bank governor
Tuesday 12 September 2023 13:14
Incoming Bank of England deputy governor Sarah Breeden said that price rises are more likely to overshoot than undershoot forecasts but that she expects the Government to reach its target to halve inflation by the end of the year.
In a response to the Treasury Committee, Ms Breeden said that the Bank’s latest set of inflation forecasts are “skewed to the upside”.
It echoes the words of the Monetary Policy Committee (MPC), the interest-rate setting body which she is set to join on November 1.
Barclays set to cut more than 450 jobs
Tuesday 12 September 2023 13:08 , Daniel O'Boyle
Barclays will cut more than 450 jobs, around 1% of its UK workforce, the union Unite said today.
The union pointed out that the cuts come despite the banking giant making more than £1 billion in profit in the second quarter of the year. The UK’s top banks benefited from rising interest rates in the first half of the year amid rising interest rates, as the price for a customer to burrow typically rose ahead of the price of lending.
Unite national officer Dominic Hook said: “How can a profitable finance organisation such as Barclays slash over 450 staff amid a cost-of-living crisis? This isn’t an organisation struggling to survive, this bank is making billions of pounds of profits.
“If these plans for compulsory redundancy are implemented then hundreds of families will lose their livelihoods and face financial hardship because of a management decision which is both unnecessary and unjustified.”
City Voices: Speed up urban regeneration to bring young people back to the office
Tuesday 12 September 2023 12:17 , Daniel O'Boyle
London was buzzing again over the summer, with confirmation that weekday tube and bus journeys are regularly hitting over 80% of pre-pandemic levels and footfall figures often exceeding 2019 levels at the weekend.
The capital’s ‘new normal’ is starting to see lifestyle patterns reverting to type. And why wouldn’t they? People enjoyed coming into the office to see colleagues and going out to meet friends before lockdown, so it makes sense that they return to that as memories of COVID restrictions fade.
The pandemic accelerated many office trends, with flexibility a key driver in attracting and retaining staff, and staff wanting more from their office as well as options on when they can spend time in it.
Bank of England likely to raise interest rates again after fast wage growth, but it could be the last hike
Tuesday 12 September 2023 11:17 , Daniel O'Boyle
The Bank of England looks set to raise interest rates again next week after wages in the UK continued to surge at a record rate, according to latest official data.
Total pay including bonuses jumped 8.5% in the three months to July, although this was boosted by one-off lump sum payments of at least £1,655 to NHS workers and civil servants over the summer. Underlying earnings growth stayed unchanged at 7.8% matching the Consumer Prices Index (CPI) inflation for the first time since October 2021.
Darren Morgan, director of economic statistics at the Office for National Statistics, said: “Earnings in cash terms continue to increase at a record rate outside the pandemic-affected period. “Coupled with lower inflation, this means people’s real pay is no longer falling.”
London commuters could be hit with 8% rail fare rise in 2024
Tuesday 12 September 2023 10:57 , Daniel O'Boyle
Rail fares in England will rise by up to 8% in 2024 if the Government uses the same formula as this year, new figures show.
Analysis of industry data by the PA news agency shows this would be the highest annual increase since at least 1996, when Britain’s railways were privatised.
The Department for Transport (DfT) aligned this year’s cap on fare increases with Britain’s average earnings growth for July 2022, which was 5.9%.
Fevertree blames ‘British summer’ as it cuts profit guidance
Tuesday 12 September 2023 10:01 , Daniel O'Boyle
The boss of Fevertree blamed “the vagaries of the British summer weather” as the drink mixer business warned on its profits for the year today.
Sales were up in the first half of the year, but profits were almost entirely wiped out as the price of glass to bottle Fevertree’s drinks soared.
The business has raised prices to adjust to the higher costs, but Susannah Streeter, head of money and markets at Hargreaves Lansdown, said there was a limit to how high it could raise prices: “When a product is already sold at premium prices, customers are likely to baulk at much bigger hikes, particularly when consumers have already got into the habit of trading down.”
Things only got worse in July and August, as “unseasonably poor weather” led to slow trading in the UK. As a result, the drinks maker now expects profit for the year to fall between £30 million and £36 million, down from £36-42 million.
Investors tear into Smurfit Kappa shares as terms of its multi-billion pound WestRock deal are unwrapped
Tuesday 12 September 2023 09:39 , Michael Hunter
Investors ripped into shares in Smurfit Kappa today after the FTSE 100 packaging maker announced terms of a merger with US peer WestRock.
Shares in the Dublin-based, London-listed company tumbled 290p to 2778p following news WestRock investors would get one new share in the enlarged group – Smurfit WestRock – plus $5 in cash. Smurfit said the price was equivalent to $43.51 per WestRock share.
Tuesday’s slide for Smurfit’s stock amounted to 9.5%, the biggest fall of the session, taking the stock to a two-month low.
Before the terms of the deal were announced, there was concern in the City that Smurfit might overpay to build its presence in US markets. The extent of the drop in its shares today looked to play into those fears, even as the deal will create a multi-billion pound international giant.
Analysis from the stockbroker Jeffries said: “With fundamentals under pressure for WestRock, European investors appear to see Smurfit’s approach as opportunistic, stepping in at a time with WestRock’s multiple under pressure, and earnings approaching a bottom.”
The deal expects to generate $400 million in annual cost savings. Smurfit’s CEO, Tony Smurfit, said today that the deal is “defining moment within the global packaging industry,” adding: “We will have the leading assets, a unique global footprint in both paper and corrugated,[and] a superb consumer and specialty packaging business.”
Wickes DIY revenue slips but local trader sales grow
Tuesday 12 September 2023 09:28 , Daniel O'Boyle
DIY sales at Wickes slipped as shoppers opted for “paint rather than paving”, but a strong performance among local traders and for kitchen refurbishments meant revenue ticked slightly up.
CEO David Wood told the Standard that Wickes’ DIY customers opted for smaller projects amid the cost-of-living crisis.
“Right now, those doing projects are being much more considered, so the projects are smaller,” he said.
But Wickes’ “do-it-for-me” kitchens and bathrooms business grew, which Wood said was thanks to an older, wealthier customer base, who had paid off their mortgages already and could pay for remodelings out of their savings. Sales to tradespeople also improved, ensuring overall revenue was up slightly at £827.7 million.
Profit was down by a quarter to £31.1 million, but Wood noted this was partly due to money spent on new store openings.
Investec retail analyst Kate Calvert said Wickes “looks well-positioned for when demand picks up”.
Equals Group unveils first dividend
Tuesday 12 September 2023 09:04 , Simon Hunt
London fintech Equals Group today unveiled its first dividend as the payments firm marked the first step on its expansion into Europe.
The firm, which caters to small and medium-sized businesses, saw its revenue jump 43% to £45 million in the first six months of the year as it processed transactions totalling £6 billion.
Equals Group said it intended to pay a dividend of 1.5p per share, subject to an approved capital reduction.
In July the firm completed the acquisition of Oonex, a Belgium-based payments business which allowed it to ramp up its expansion into the EU.
CEO Ian Strafford-Taylor said: “We are prohibited from doing quite a lot of things in mainland Europe so this acquisition will allow us to penetrate that market. We know our existing customers would do more with us if we had that capability.
“We could have applied to get licenses there, but that takes time and having an existing business with a footprint and licenses with the regulator means you can do it a lot quicker.”
“Despite all the doom and gloom around, some of our core businesses are still growing well,” CFO Richard Cooper added.
Equals Group shares rose 3.4% to 103p.
Market data as FTSE 100 rises
Tuesday 12 September 2023 08:58 , Daniel O'Boyle
Tka e alook at our key market data as the FTSE 100 rises back above 7500.
Oxford Street needs help, says Primark boss
Tuesday 12 September 2023 08:52 , Simon English
Primark shoppers are back in London and on Oxford Street in particular, but as a shopping destination it is far short of what it used to be.
So warns George Weston, the chief executive of Associated British Foods, the parent group of Primark that also owns Silver Spoon sugar and Twinings tea.
ABF today raised its profit forecast for the second time in four month thanks to strong trading in clothes and food.
But like other fashion houses including Superdry, Weston thinks Oxford Street needs help.
“There is a lot of improvement possible. Our stores are trading well, certainly up to pre-pandemic levels. But the area has deteriorated.”
The bankruptcy of some big names has lessened the street. “Debenhams is a big loss, House of Frasers, Top Shop has gone. There hasn’t been adequate replacements,” he said.
AB Foods, whose shares are up 30% this year, said Primark’s sales for the 2022/23 year should be around £9 billion - 15% ahead of 2021/22, with like-for-like sales up 9%.
Total profits should now be close to £1.5 billion.
Primark’s growth has been driven by selective price increases, well received ranges and strongly performing new stores.
Sales would have been better still but for poor summer weather.
Wage growth offers pension boost
Tuesday 12 September 2023 08:27 , Daniel O'Boyle
Wages in the UK continued to surge at a record pace and have not been outstripped by inflation for the first time in nearly two years, according to official figures, as pensioners also eye a potential boost.
Average regular weekly earnings excluding bonuses were up 7.8 per cent year-on-year in the three months to July, the Office for National Statistics (ONS) said. That was unchanged from June, but ahead of July’s inflation level, which had fallen to 6.8 per cent, meaning a boost in real terms to people’s incomes after a long period of decline.
Total pay including bonuses jumped by 8.5 per cent, meaning that it exceeded inflation for the first time since March 2022, up 0.6 per cent with inflation taken into account.
Grocery price inflation falls to lowest level in a year
Tuesday 12 September 2023 08:27 , Daniel O'Boyle
Grocery price inflation has dropped to its lowest level in more than a year – but 95% of consumers remain concerned about rising supermarket bills, figures show.
Prices across grocers were 12.2% higher than a year ago for the four weeks to September 3, down from the previous month’s 12.7%, analysts Kantar said.
It is the sixth consecutive decline in the rate of price rises since the figure peaked at 17.5% in March.
‘We should be cautious of analysis that says pay's driving rising prices”
Tuesday 12 September 2023 08:24 , Daniel O'Boyle
Neil Carberry, REC Chief Executive, said that observers should be cautious about seeing wage growth as fuelling inlation.
“Pay rising to meet falling inflation is a function of firms giving higher pay awards to staff in the spring, ongoing staff shortages in some sectors such as hospitality and logistics, and a big rise in the minimum wage. It was always likely that pay would meet falling inflation during this year, but we should be cautious of any analysis that suggests pay is driving rising prices at this stage – businesses have been carefully managing looking after workers and maintaining cost stability,” he said.
“Today’s numbers do suggest that the path to lower inflation may be more of a slope than a cliff, but there is evidence of the gentle cooling in the jobs market the Bank of England has been seeking. With employment and hours dropping a little alongside inflation, wage pressure in the private sector is not likely to be as high from here on in as the labour market loosens.”
FTSE 100 reclaims the 7500-point mark as banks push higher
Tuesday 12 September 2023 08:20 , Michael Hunter
Banking stocks took the baton at the forefront of the FTSE 100’s run higher, which entered a fourth straight session in opening trade as investors measured the implications of more strong wage growth.
Overall, the main London stock index added over 18 points to 7,515.02, with some of the UK’s biggest high street lenders at the forefront of the market. Lloyds Banking Group added 0.4p to 42p, a rise of over 1% and the best gain in the sector.
Barclays was 1.3p stronger at 151p. NatWest gained 1.6p to 228p.
Miners eased back having set the pace on Monday. Antofagasta, the Chilean copper giant, handed back 13p to 1496p. Otherwise, stocks with defensive properties were under pressure as the mood stayed positive, drawing traders into riskier sectors. Severn Trent, the water utility, fell 16p to 2425p.
Is another rate hike locked in after latest wage growth?
Tuesday 12 September 2023 07:53 , Daniel O'Boyle
The latest employment and wages figures showed some signs of interest rates continuing to slow the economy, but wage growth was still much faster than the Bank of England would hope.
Nicholas Hyett, Investment Manager at Wealth Club, said; “These numbers show some signs the UK labour market could be softening a touch, with a modest increase in unemployment. Add that to recent weakness in UK PMIs, and impending job losses from Wilko’s high profile closure and you can see why suggestions are starting to emerge that the Bank of England can pause future interest rate rises.”
But Craig Erlam, Senior Market Analyst, UK & EMEA at OANDA, said: “The Bank of England may have little option but to raise rates again next week despite comments recently indicating the debate will be fairly balanced.
“The UK labour market figures offer something for everyone on the face of it but under the circumstances, BoE hawks will likely be more emboldened by the figures than the doves.”
FTSE 100 expected to rise after wages data stokes debate on rate rises
Tuesday 12 September 2023 07:27 , Michael Hunter
London’s FTSE 100 is expected to stay positive in early Tuesday trade, as investors digest wages and jobs data showing that pay including bonuses passed above the rate of consumer price inflation.
With the Bank of England’s base interest rate at 5.25% after five hikes in a row, wage growth including bonuses of 8.5% took it past the 6.8% level of the consumer price index. That is likely to add pressure for the 15th consecutive rate rise from the Bank of England later this month.
But it will also have to watch the impact of tighter monetary policy on the wider economy. The unemployment rate ticked up to 4.3%.
In the meantime, the main London stock index is expected to carry on rising after posting modest overall gains over the previous session. It was expected to gain 13 points to 7,509.87.
Alice Haine, Personal Finance Analyst at Bestinvest said: “While the Bank of England is likely to welcome signs the tight labour market is softening, it will be less accommodating about accelerating wage growth
“Meanwhile real total pay, which includes bonuses, grew 8.5% over the same period. The good news is that in real terms, once inflation is factored in, real pay grew 0.6% and total pay 1.2%, offering some relief for households who have seen their disposable incomes battered by the cost-of-living crisis.”
Minister for employment ‘not complacent’
Tuesday 12 September 2023 07:25 , Daniel O'Boyle
Following the latest employment data, Minister for Employment, Guy Opperman MP noted that the unemployment rate is still low by historical standards, but said this would not make the Government complacent about getting more people into work,
“This Government’s record on employment is clear; there are one million fewer workless households than in 2010 and the number of people on company payrolls is a near record high,” he said, “But we are not complacent about the challenges we face, which is why we remain focused on removing barriers to help people find and succeed in work.
“Our £3.5 billion package to deliver more tailored job support combined with our expanded childcare offer will help unlock individuals’ potential and grow the economy.”
Bonuses lift wages numbers past forecasts while jobs data improves
Tuesday 12 September 2023 07:12 , Michael Hunter
The Bank of England’s fight against inflation will have to factor in news of rocketing pay due to high bonuses, out this morning, and powering past forecasts.
Average earnings for June including bonuses soared 8.5% year-on-yea. Excluding bonuses, it rose 7.8%, in line with forecasts. The unemployment rate ticked up to 4.3%, as expected. There were 207,000 more people out of work over the three month to the end of June, more than the 185,000 expected.
High wage growth is one of the main factors watched by the Bank of England in its fight against inflation after 14 consecutive rate hikes has taken UK interest rates to 5.25%
Recap: Yesterday’s top stories
Monday 11 September 2023 23:04 , Simon Hunt
Good morning. Here’s a summary of our top headlines from yesterday:
Planning activity for new London homes has plunged to its lowest level since 2010 according to new research
Heathrow set to pass 2019 passenger traffic this month for first time since pandemic
WANdisco cuts 40% of remaining workforce as it unveils rebrand