FTSE 100 Live: City focuses on Rishi Sunak’s Budget after Microsoft and Google numbers impress

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 (ESI)
(ESI)

Growth forecasts and the Chancellor's plan for shoring up the public finances will be among City's talking points when Rishi Sunak delivers his budget and three-year spending review today.

Even though the latest borrowing figures for September were better than had been forecast in March, economists still expect Sunak to unveil some stringent fiscal rules to ensure the country's debt-to-GDP ratio is on a downward trajectory.

Just before the Chancellor stands up at 12.30, GlaxoSmithKline is due deliver its third quarter trading update while traders will be watching BT Group shares closely after takeover speculation yesterday lifted the company's beleaguered price.

FTSE 100 Live Wednesday

FTSE closes lower

17:15 , Oscar Williams-Grut

The FTSE 100 has closed 24 points lower at 7253.

The day has been dominated by coverage of the Budget. You can find full coverage of Rishi Sunak’s speech as it happened here and key points from the announcement here.

Housebuilder Taylor Wimpey topped the FTSE 100 with a gain of 2.6% despite the Chancellor announcing a new tax on developers.

That’s all from us on the blog today. Join us again tomorrow.

Pubco shares jump as hospitality bosses cautiously welcome Budget announcements

14:40 , Naomi Ackerman

Shares in pub companies jumped after the Chancellor announced a reduction in the rate of duty on draught beer and cider in his Budget.

Rishi Sunak announced a 5% cut to the tax on pulled pints in the Autumn Budget - the biggest cut to beer duty for 50 years.

Shares in JD Wetherspoon shot up by as much as 5%; shares in All Bar One owner Mitchells & Butlers by 4.6%; in pubco Marston’s by as much as 4.6%; and in London pub company Young’s by 1%.

Bosses welcomed the Budget’s announcements as giving the sector “breathing space”, but urged ministers to go further still.

Read more here

Some disappointment at business rates relief package

14:13 , Joanna Bourke

Chancellor Rishi Sunak has moved to give more business rates support to firms, many of which have been hammered by the pandemic.

Firms hoping for drastic reforms were left waiting, but Sunak did use the Budget to update on a number of measures. There was mixed reaction from the retail and hospitality sectors.

Vivienne King, chair of the Shopkeepers’ Campaign, said there was disappointment “that there is no commitment to annual revaluations so that tax bills reflect the market property values”.

Read more HERE.

UK set to reach pre-pandemic size by year end

14:10 , Oscar Williams-Grut

The UK economy will boom this year and next, according to fresh forecasts today from the Office for Budget Responsibility.

Chancellor Rishi Sunak said in his Budget speech today the financial watchdog had increased its forecast for the rise in GDP this year from 4% to 6.5%. That represents a strong bounce-back from the pandemic.

In 2022, the economy will grow another 6%. The economy will return to its pre-Covid level at the turn of this year – earlier than previously forecast.

Read more.

Housebuilders unmoved by new tax

14:00 , Oscar Williams-Grut

Housebuilder shares are largely flat after Chancellor Rishi Sunak said residential property developers face a new cladding tax.

Sunak confirmed £5 billion to remove unsafe cladding from the highest risk buildings.

That will be partly funded by the Residential Property Developers Tax, which Sunak said will be levied on developers with profits over £25 million at a rate of 4%.

But the move is not a huge shock: in February the tax was first mentioned as part of the government’s wider plan to bring an end to unsafe cladding.

Read more.

Banking shares dip even as chancellor cuts profit surcharge

13:47 , Oscar Williams-Grut

Rishi Sunak today confirmed plans to cut the tax surcharge on banks from 8% to 3%.

He also gave a helping hand to so-called “challenger banks” – the smaller, typically digital players that are trying to compete with the big high street names such as Lloyds and NatWest.

They won’t pay the surcharge until they pass an annual allowance of £100 million.

The surcharge is a tax on bank profits on top of corporation tax. Cutting it is deemed to be a measure that will help keep the UK’s vital financial services sector competitive.

Overall bank tax will still increase in 2023 however, due to a rise in corporation tax. In that year, banks will pay 28% in tax.

Barclays shares slid 4p to 199p, Lloyds was up 0.13p at 49.12p

Budget 2021: Banks surcharge cut, hand out to “challenger” banks

13:25 , Simon English

THE Chancellor today confirmed plans to cut the tax surcharge on banks from 8% to 3%.

He also gave a helping hand to so-called “challenger banks” – the smaller, typically digital players that are trying to compete with the big high street names such as Lloyds and NatWest.

They won’t pay the surcharge until they pass an annual allowance of £100 million.

Read more here

Rishi Sunak delivers his third budget

12:50 , Oscar Williams-Grut

Chancellor Rishi Sunak is delivering his third budget right now in parliament. You can follow it on our live blog here.

Budget 2021: UK economy to boom this year and next says OBR

12:50 , Simon English

THE economy will boom this year and next, according to fresh forecasts today from the Office for Budget Responsibility.

Chancellor Rishi Sunak said in his Budget speech today the financial watchdog had increased its forecast for the rise in GDP this year from 4% to 6.5%. That represents a strong bounce-back from the pandemic.

In 2022, the economy will grow another 6%. The economy will return to its pre-Covid level at the turn of this year – earlier than previously forecast.

The OBR is less optimistic about the years after 2022, when it predicts the economy will grow at 2.1%, 1.3% and 1.6%. Those forecasts are highly vulnerable to events in the future.

read more here

GSK shares lift on sales beat

12:32 , Simon Freeman

Shares in GSK enjoyed a lift as it unveiled sales of £9.1 billion in its third- quarter results, beating analyst expectations of £8.7 billion.

Sales of blockbuster shingles drug Shingrix recovered from a pandemic slump, rising by 41% to £502 million and lifting group vaccine sales to £2.2 billion.

Pharmaceuticals revenue was up 5% to £4.4 billion led by a 34% rise in sales of cancer therapies.

And consumer sales were up 3% to £2.5 billion.

GSK confirmed it is preparing to move 800 staff from its landmark HQ in Brentford, west London, to a new campus for the consumer division and will appoint a chair to head up the new company in the next quarter.

Shares, which are up 10% so far this year, rose 3.5% to 1483.0p this afternoon.

FULL STORY HERE

GSK summons gene genius

11:46 , Simon Freeman

GSK has recruited a top US geneticist to strengthen the scientific credentials of its board as it circles the wagons around under-fire CEO Emma Walmsley.

The FTSE 100 drugs-maker has hired Dr Harry ‘Hal’ Dietz, a lecturer at leading research college.

The Johns Hopkins University and a former president of the American Society of Human Genetics, as a non-executive director.

He will also sit on the science committee, scrutinising research, performance and acquisitions at the new vaccines company.

READ FULL STORY

Santander boosted by buoyant mortgage market

11:30 , Oscar Williams-Grut

Santander’s third quarter profits were boosted by write-backs from pandemic-era provisions, continued momentum in the mortgage market, and changes to its popular 123 current account, the Spanish bank said today.

Pre-tax profits rose 19% to £687 million in the quarter. The jump came as the bank wrote back £100 million from loss provisions taken during the pandemic. It takes total write-backs so far this year to £170 million.

Operating costs in the quarter also fell by 7% to £579 million. The bank has been embarking on a cost cutting drive that includes relocating its headquarters to Milton Keynes and shutting over 100 UK branches. Santander said today that £666 million of transformation spending had realized £404 million in cost savings to date.

In its core business, the bank was boosted by strong demand for mortgages as the UK’s property market continues to see surging prices despite the end of the Stamp Duty holiday. Santander has lent £5.2 billion in mortgages so far this year. Chief financial officer Jose Garcia Cantera told Bloomberg TV the bank was seeing the strongest demand for UK mortgages in “many, many years.”

Read more.

Countdown to the budget

11:14 , Oscar Williams-Grut

Chancellor Rishi Sunak is due to deliver his third budget in a little under an hour and a half. Businesses will be watching closely for any announcements that could affect them, with a backdrop of soaring costs and rising taxes.

Businesses are hoping for tax breaks, support loans, and help on training and skills to address gaps in the jobs market.

You can read more on the budget wish list from businesses here and follow the build up to the budget on our live blog.

Aldi expands in London with three new stores on the way

10:46 , Joanna Bourke

Aldi is increasing the size of its London store portfolio by opening three new branches.

The chain currently has 51 shops in the capital and it said three more will open before the end of the year. Its first site in London opened in 1995 in Feltham.

A new site will open in Harringay (Green Lanes) on October 28, and branches in Orpington and Cheam will respectively start welcoming customers on December 2 and December 9.

Read more HERE.

Blue-chip debut for Darktrace

10:35 , Graeme Evans

As Big Tech's earnings bonanza builds a head of steam on Wall Street, investors in London are again being left frustrated by a lack of similar action on this side of the Atlantic.

Traditional sectors such as banking, mining and retail continue to dominate the FTSE 100 index, although there was some changing of the guard today as cyber security firm Darktrace entered the top flight in place of supermarket Morrisons.

Shares in the Bradford-based retail chain were today halted at 286.4p after its private equity takeover by Clayton, Dubilier & Rice crossed the finishing line.

That left the way for Darktrace to complete its rapid transformation into a blue-chip company, just six months after its chief executive Poppy Gustafsson launched the business onto the stock market at a price of 250p a share.

The company is now trading at 711p for a valuation of £5 billion, although the honeymoon period for the AI-focused security specialist appears to be over after one City firm's “sell” recommendation sent shares sharply lower on Monday. It dipped another 22.5p today.

One of the handful of other tech stocks in the FTSE 100 is Aveva, with the Cambridge-based industrial internet-of-things company today reporting revenues growth of 9% at the half way point of its financial year. Its shares have been under pressure since early September and were down another 44p to 3594p today.

Mining stocks were also weaker as the FTSE 100 index fell from last night's 20-month high, down 24.01 points at 7253.60. Wall Street's S&P 500, meanwhile, has been trading at a record high after a run of positive earnings updates, including from Microsoft.

The FTSE 250 index fell 2.73 points to 23,158.88, although FirstGroup rose 5.05p to 101.2p after it invited shareholders to tender their shares at 105p under plans to distribute £500 million from recent US disposals. Activist investor Coast Capital Management, which holds a 12% stake, has said it will participate in the tender offer in full.

FTSE 100 lacks direction despite Compass rally

09:06 , Graeme Evans

Weaker mining stocks meant the FTSE 100 index fell slightly from last night's 20-month high, down by just 4.7 points to 7272.92.

Anglo American and Glencore were 2% lower, while industrial software company Aveva declined 60p to 3580p after a brief trading update revealed revenues growth of 9% in the first half of the year.

Catering group Compass was the biggest riser in the top flight, lifting 30p to 1524p as investors drew comfort from a solid trading update by French food services rival Sodexo.

The FTSE 250 index was 8.23 points higher at 23,169.50, led by FirstGroup after it launched a tender offer as part of plans to distribute £500 million to shareholders following its recent US disposals.

Activist investor Coast Capital Management, which holds a 12% stake, has said it will participate in full. Shares were 5.85p higher at 102p, compared with the tender offer price of 105p.

Monzo heads to £3 billion value in fundraiser

09:01 , Simon English

MONZO is in talks with shareholders to raise another £300 million to fund expansion plans.

The digital based lender, founded in 2015, is one of the best known of the new breed of “challenger” bank, aimed at shaking-up the sector.

According to Sky News, the fund raiser would value the business at £3 billion, a fairly extraordinary price for a business that lost £130 million in the year to February. That came atop £114 million of losses the year before.

It aims to make a profit next year.

read more here

Bloomsbury boosted as retailers stock up on books early

09:01 , Joanna Bourke

Retailers getting in Christmas book orders earlier than normal, to ensure shelves are full while the supply chain crisis continues, has helped Harry Potter publisher Bloomsbury to achieve record first half revenues.

The company said it sought to mitigate logistics headaches, such as potential short supply of paper, by printing well in advance of normal.

Chief executive Nigel Newton added that booksellers, both online and physical retailers, “significantly increased” stock levels in the six months to August 31. Firms are typically ordering up to two months earlier than usual.

Sales rose 29% to £100.7 million, and pre-tax profits more than trebled to £11.1 million.

Read more HERE.

BT shares steady after takeover talk

08:24 , Graeme Evans

BT Group shares are little changed in opening dealings, having surged 6% yesterday after the company's appointment of finance house Robey Warshaw fuelled speculation that it is shoring up its defences against a takeover attempt.

The focus is on the Paris-quoted Altice business controlled by billionaire Patrick Drahi, which took a 12.1% stake in BT in June. It is bound by takeover rules not to make an offer until 10 December, but as that deadline approaches the City is wondering whether the major shareholder will launch a takeover or press for a break-up of the business.

Shares surged above 200p after Altice took its stake but have fallen 11% in the past month to as low as 135p, amid concerns that rivals are planning to step up their own full-fibre broadband roll-out in competition to BT's Openreach.

UBS analyst Polo Tang, who has a sell recommendation on the shares, said earlier this month that the complexity of BT's pension scheme and a potential government veto made a full takeover approach much less likely.

Alphabet's “embarrassment of riches”

08:07 , Graeme Evans

Google and YouTube business Alphabet reported first quarter revenues of $65.1 billion, which is modestly ahead of market expectations and up 41% year-on-year.

Chief executive Sundar Pichai said: “Five years ago, I laid out our vision to become an AI-first company. This quarter’s results show how our investments there are enabling us to build more helpful products for people and our partners.”

Operating profits rose 87.6% to $21 billion, well ahead of market expectations and driven by the Google Services arm that includes the search engine as well as YouTube, Android and Google Play.

Nicholas Hyett, an equity analyst at Hargreaves Lansdown, notes that Alphabet reported free cash flow of $18.7 billion in the quarter, up from $11.6 billion a year ago to leave the group with net cash of $127.7 billion.

He said its position reminded him of the 1985 film Brewster’s Millions, where a minor league baseball player must spend $30 million in thirty days in order to inherit an even vaster fortune.

Hyett said: “There simply aren’t enough profitable projects in which the group can invest its embarrassment of riches.

“That’s certainly a nice problem to have, but it does leave us wondering what it intends to do with the nearly $130 billion of cash it has lying around. Buying back $12 billion of stock a quarter has barely put a dent in it.”

FTSE 100 consolidates gains

07:47 , Graeme Evans

The FTSE 100 index is today set to consolidate at a 20-month high, having been buoyed in recent days by strong quarterly earnings updates on both sides of the Atlantic.

Dettol and Nurofen firm Reckitt Benckiser led the way in London yesterday as shares rose 6% on the back of reporting stronger-than-expected sales, while Wall Street markets have continued to set records after a decent run of updates.

This trend continued after the closing bell in New York, when cloud computing firm Microsoft and Google's owner Alphabet posted figures showing moderately better-than-expected quarterly revenues growth of 20% and 41% respectively.

Revenues for Twitter rose 37% as the social media platform said the impact of changes to privacy settings on the Apple iOS operating system had been modest. However, there was some disappointment for analysts after Twitter reported 211 million daily active users.

Of the 41 S&P 500 companies that posted figures yesterday, Deutsche Bank notes that 33 beat estimates. And for the earnings season to date, it said 166 S&P companies have so far reported with 139 beating earnings estimates.

The S&P 500 closed slightly higher last night, although there were no further gains for trillion dollar Tesla after Monday's spectacular session when shares zoomed past the threshold on the back of a major order for 100,000 vehicles from rental giant Hertz.

The FTSE 100 index gained 0.8% on Tuesday but is set to open broadly unchanged today, with the Chancellor's Budget and Spending Review at 12.30 the main focus.

Much of the content appears to have been disclosed already, leaving City economists to focus on the finer details about how Rishi Sunak intends to balance the books.

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