By Live Commentary
The FTSE 100 has closed up 39 points or 0.5 per cent to 7,385.5. Among UK companies with reports and updates are Nationwide, Tesco, DS Smith, Legal & General, Liontrust and Rio Tinto. Read the Friday 18 November Business Live blog below.
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Just before close, the FTSE 100 was up 0.43% to 7,378.23.
Meanwhile, the FTSE 250 was 0.77% higher at 19,268.61.
All electric car drivers will pay £165 a year in tax from April 2025 after Jeremy Hunt announced an end to tax exemptions for greener vehicles in yesterday’s Autumn Budget.
But even after the tax hike EV drivers can still enjoy running cost savings thanks to lower fuel bills. These savings work out at more than £400 a year for mid-market models rising past £1000 for more expensive options, according to an analysis by MailOnline.
Rio Tinto Group has ended a pair of agreements with two minority investors who had expressed dissent over its prospective takeover of Turquoise Hill Resources.
The mining giant will now hold a shareholder vote on the £2.9billion acquisition of the remaining 49 per cent of the mineral exploration company that it does not own at an unspecified date.
MJ Gleeson shares have fallen more than 7 per cent today as the housebuilder reported that the proportion of purchases customers are cancelling has more than doubled compared to the start of this year.
The company said there had also been a slowdown in demand since the mini-budget.
The number of houses that customers reserved on each of its Gleeson Homes sites dropped from 0.42 a year ago to 0.26 in the past six weeks, it said.
Cancellation rates in the same period jumped to 41 per cent compared to 20 per cent in the first ten weeks of the year.
Chairman Dermot Gleeson told investors:
In September we announced record revenue and profits for the year to 30 June 2022 and said that we were well-positioned to deliver further profitable growth in the current financial year, notwithstanding the outlook for the broader economy.
Shareholders will be well aware that since then much has changed.
The market volatility and sharp increase in interest rates following the mini-budget impacted buyer confidence and caused a significant slowdown in demand.
Despite retail sales topping estimates with a rise of 0.6 per cent in October, after falling 1.5 per cent in September, they still remain below pre-Covid levels, fresh figures from the Office for National Statistics show.
Sales volumes fell 2.4 per cent in the August-October quarter from the previous three months – the sharpest fall since March 2021, when the UK was in lockdown.
The ONS also noticed shoppers being more thrifty, with second-hand stores and auctioning houses seeing a big rise in sales over the month and helping non-food store sales 1.1 per cent higher.
Harland & Wolff surged 180 per cent to 25p this week after landing a major contract win.
Based in Belfast, the shipyard and offshore construction firm is renowned for building the Titanic.
It has now been selected as the preferred bidder for a £1.6billion contract to manufacture three vessels providing munitions, stores and provisions to the Royal Navy’s aircraft carriers, destroyers and frigates.
But another company from the 2021 IPO rush has come to an inglorious end with Parsley Box deciding to delist after only a year and half on AIM.
Shares, which were floated in March 2021 at 200p for an initial market cap of £83million, went on to lose over 99 per cent of their value.
For more of this week’s risers and fallers on AIM, read below…
The Government has announced a 7 per cent cap on social housing rents next year as part of Chancellor Jeremy Hunt’s Autumn Statement, as well as reducing the time universal credit claimants must wait to get a loan to help cover mortgage interest payments.
Under existing rules the Government regulates how much social housing rents can increase each year.
Tom Werner has broken the brief silence surrounding the prospective sale of Liverpool by Fenway Sports Group – saying that they are ‘exploring’ selling the club.
News broke earlier this month that the American owners were looking to end their 12-year ownership of Liverpool through the selling off of their controlling stake in the club.
Egg shortages will last beyond Christmas and into the new year, an industry body has warned, amid disruptions in supply caused by bird flu and spiralling costs.
Asda is limiting customers to two boxes of eggs each and Lidl is restricting customers in some stores to three boxes.
Laid off tech industry workers in Britain could find a new home at Jaguar Land Rover, as the 100-year-old luxury carmaker looks to hire hundreds of engineers to help develop electric car technology.
The carmaker has announced a jobs portal for displaced tech workers to fill 800 roles spanning self-driving, electrification, machine learning and data science.
The company said it believed workers leaving big tech groups like Amazon were most likely to have the required skills to fill new roles in Britain, Ireland, the US, India, China and Hungary.
The majority of the jobs will be in Britain.
The hiring drive comes after thousands of layoffs in recent weeks at U.S. tech firms including Twitter, Meta and Amazon, some of which have offices in London and Dublin, Ireland.
‘Our digital transformation journey is well underway but being able to recruit highly skilled digital workers is an important next step,’ Chief information officer Anthony Battle said in a statement.
JLR last year announced an electrification strategy under which all Jaguar cars would be fully electric by 2024 and an electric option would be offered across its entire portfolio including Land Rover.
The FTSE 100 is up 0.8 per cent to 7,408.05, while the more UK-focused FTSE 250 is up 0.7 per cent to 19,247.66.
The pound is also higher, despite the economic gloom, with sterling up 0.4 per cent against both the dollar and the euro.
£1 currently buys $1.19 and €1.149 on currency markets.
Britain’s pubs are under huge pressure following yesterday’s autumn budget statement as around 50 pubs are closing every month amid soaring costs, business leaders have warned.
Pub and brewery bosses said they were facing ‘a hurricane of costs’ as energy bills continue to rise for businesses still struggling from the impact of the Covid-19 pandemic.
Legal & General expects to take a £10million hit from the recent pension liquidity fund crisis, but shares rose as the insurer left its full-year profit forecasts unchanged.
The FTSE 100 listed group said revenue and profits in its pensions arm were set to fall by about £10million this year as clients ‘sold higher fee products to meet collateral requests’ after chaos caused by September’s mini-budget.
Retail giant Tesco is offering salary advances to its employees to help them cope with the worsening cost-of-living crisis.
Britain’s largest supermarket has already raised staff pay twice this year, most recently last week when it increased the basic hourly rate by 20p to £10.30 and to £10.98 for workers in London.
British retailers saw a slight recovery in sales last month but it was not enough to claw back a September slump.
According to the Office for National Statistics, retail sales volumes were estimated to have risen by 0.6 per cent in October.
Parsley Box is set to cancel its AIM listing as it has seen its value being wiped out since its £84million flotation in March last year.
The company floated at 200p, but the shares are now worth just 2p.
The provider of cottage pies and hotpots for the baby boomer generation said they had lost support from the market:
The public markets are unlikely to provide the Company with wider or more cost-effective access to capital than the funding options it already has from the Company’s existing major shareholders in the next 12 months
Accordingly, the Board is of the view that the public markets do not provide the optimal platform to raise such funds and, in particular, that there may be greater opportunities to raise additional capital in the private markets.
Elon Musk has locked his dwindling Twitter workforce out of their offices until next week amid reported concerns that disgruntled staff could sabotage the company.
Twitter staff were told that all of their offices will be shut until next week effectively immediately – without any explanation as to why.
Insurance giant Legal & General said it faces a £10million hit to pension profits as a result of the pension liquidity crisis.
The group said it had to sell higher fee products in order ‘to meet collateral requests’ after liability-driven investment (LDI) strategies in the pension market were shaken dramatically in the aftermath of the September mini-budget by Liz Truss’s former Government.
L&G, which is one of the biggest LDI investment managers in Britain, said overall profit targets for the year remain unchanged despite the impact.
It said its has benefited from a recent strong performance by its pension risk transfer division.
Higher interest rates have lifted profits at Nationwide Building Society, but the lender has warned of a decline in mortgage demand and a rise in bad loans.
Britain’s biggest building society reported a 13.5 per cent rise in pre-tax profit to £969million for the six months to the end of September.
Net interest margin – or the difference between how much a bank earns in interest on loans compared to what it pays on deposits to savers – rose to 1.48 per cent from 1.24 per cent.
Billions of pounds could be unleashed to invest in Britain as the Chancellor moves to free the insurance sector from its EU shackles.
In documents published alongside the Autumn Statement, Jeremy Hunt confirmed he would push ahead with reforming complex regulations known as Solvency II.
Lidl is plotting to overtake Morrisons as the UK’s fifth biggest grocer, with an extra 770,000 shoppers a week flocking through its doors.
Ryan McDonnell, boss of the German discounter, declared that his firm has the ‘momentum’ to surpass its more established rival.
But he added that there was still ‘a lot of work to be done’.
It has been a year to forget for the average investor, with the value of stocks and bonds in freefall for most of 2022.
Over £1.3trillion has been wiped off the value of UK bonds since the beginning of the year amid a wider sell-off, with equity markets have fallen in tandem.
The FTSE 100 has inched higher this morning, as the energy and mining sectors boosted the exporter-heavy index a day after Britain unveiled its new budget aimed at returning stability to the economy.
The energy sector’s 0.7 per cent increase leads gains, along with a 0.4 per cent rise in mining stock due to higher precious metal prices.
Markets also digested the Autumn Statement unveiled on Thursday, when Chancellor Jeremy Hunt said Britain would face a very challenging time over the next two years, but the budget would help to tackle inflation and put the economy on a stronger footing.
Tesco is offering its staff advances on their pay to help them navigate a worsening cost-of-living crisis.
Under the Tesco scheme some 280,000 workers in the UK can receive up to 25 per cent of their contractual pay early.
It said the idea is to help staff avoid having to take on expensive debt with high interest payments, such as pay day loans.
Nationwide Building Society’s first-half pre-tax profit rose 13 per cent year-on-year to £969million, as income benefited from rising interest rates.
The lender said credit impairment charges rose to £108million, from a net release of £34million set aside for potential loan losses in the first half of last year.
EY UK&I retail lead Silvia Rindone:
‘Although retail sales rose slightly in October, they continued their broad downward trajectory – coming in lower than they were in August – as consumers continued to cut back on discretionary spending on ‘big ticket’ items.
‘The unseasonably warm autumn weather meant shoppers may have delayed buying their winter wardrobes, placing further pressure on many retailers and brands already contending with falling consumer confidence. As a result, we are seeing numerous retailers heavily discounting ahead of Black Friday on 25 November. Many will be hoping the start of the 2022 World Cup will offer a much-needed boost, particularly to food store sales which fell by 1% in October.
‘The announcement in yesterday’s Autumn Statement that energy bills support will be scaled back in April 2023, as well as the freeze on income tax thresholds, is likely to further dampen consumer confidence at a critical time for the retail sector.
‘Falling consumer confidence is now having a clear impact on retailers’ bottom lines. EY-Parthenon’s latest Profit Warnings analysis for Q3 2022 found that over 40% of FTSE Retailers issued a profit warning in the last 12 months as spiralling costs, supply chain and labour challenges combined with shrinking demand.
‘Now, more than ever, retailers need to ensure they have a differentiated pricing strategy in place which secures consumer demand and allows them to pass on price increases to certain customer segments. They also need to ensure they have cash management plans in place to free up working capital which will be vital to surviving a challenging winter.’
Consumer confidence has edged higher this month but remains close to record lows.
The long-running consumer confidence index by research group GfK ticked up to minus 44 from minus 47 in October and minus 49 in September.
It stood at a better – but still gloomy – minus 14 a year ago.
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