FTSE 100 Live: THG stock crashes, jobs numbers fuel interest rates speculation, Brent crude hits $84 a barrel

·13-min read
 (ESI)
(ESI)

The latest UK labour market figures today fuelled speculation about an imminent hike in interest rates, with the unemployment rate dropping to 4.5% and economists increasingly worried about mounting wage pressures.

Capital Economics warned the figures from the Office for National Statistics may prompt some members of the Bank of England's monetary policy committee to put more weight on the upside risks to inflation. The price pressures have recently raised the prospect that the Bank’s base rate could be lifted as soon as December.

Global markets dipped overnight and the FTSE 100 index was 56 points lower after Brent crude topped $84 a barrel for the first time in three years.

FTSE 100 Live Tuesday

FTSE closes lower as THG crashes and Ocado shines

17:07 , Oscar Williams-Grut

The FTSE 100 has closed mildly lower today, down 16 points, or 0.2%, at 7130.

The big story in the market is outside of the bluechip index: THG. The e-commerce group - formerly known as The Hut Group - has seen its shares close down 35% after a disaster of a capital markets day.

THG had already seen its share price drop by more than a third in a month after it announced plans to spin out its beauty business. Instead, THG will focus on Ingenuity — its promising, but still very new, e-commerce platform.

THG only floated last September and beauty is a major chunk of the company. The pivot has given many investors whiplash. A bearish note from The Analyst hasn’t helped either.

Today’s investor and analyst meeting was meant to brief everyone about Ingenuity. Clearly it has not allayed concerns.

Elsewhere, Ocado rose to the top of the FTSE - up 5.3% - after US supermarket Kroger extended a deal to use its automated warehouse technology.

Earnings jitters

07:34 , Graeme Evans

The FTSE 100 index is set to follow US and Asia markets lower after sentiment was shaken by oil prices rising to fresh multi-year highs.

The fear of investors is that rising energy costs mean that the third quarter earnings season, which starts this week, will see profits forecasts being tempered for the year ahead.

Oanda's market analyst Jeffrey Halley said: “With equity valuations so pimped up, thanks to the world’s central banks, any changes to the assumed post-pandemic boom growth story could have an outsized negative effect.”

Interest rates close to zero are still supportive of equities, but Halley said the herd-like nature of markets meant a wobbly earnings season could see investors heading for the exit.

The results season begins tomorrow with figures from JP Morgan Chase, followed by Bank of America, Morgan Stanley and Citigroup the next day.

Overnight, the S&P 500 retreated by 0.7% and the Nasdaq by 0.6%, while in Asia trading was down by similar levels.

Halley added: “European markets are unlikely to take solace from the performance of Asia today, especially as Europe and the UK have a particularly soft underbelly when it comes to energy prices.”

Brent crude traded above $84 a barrel for the first time in three years yesterday and was just below this level today. West Texas crude oil futures are up slightly at $80.72 a barrel.

The FTSE 100 is forecast to open 50 points lower, having risen yesterday by a similar level yesterday thanks to a strong performance by mining and financial stocks. The FTSE 250 index, which is more exposed to the fortunes of the UK economy, lost 0.2%.

Marley postpones IPO

07:49 , Graeme Evans

It's been a stunning year for stock market flotations, with Oxford Nanopore the latest high-profile new entrant in London.

However, there are signs today that the listing boom is under threat after roofing tiles company Marley postponed its initial public offering (IPO) due to the current market conditions.

It said it had received considerable institutional investor interest, but that proceeding with an IPO “in this period of market volatility is not in the best interests of the group and its stakeholders”.

Marley, which was founded in the 1920s in Kent and makes products from five factories, announced its intention to float last month, when market sources estimated the move could value the business at around £600 million.

It has been working with Jefferies, Peel Hunt and Panmure Gordon on the plan.

07:57 , Simon English

Easyjet today insisted that recovery “is underway” even as it predicted losses for the year to September of more than £1.1 billion.

It insisted it is not worried about rival BA’s plans to launch a short-haul hub at Gatwick.

CEO Johan Lundgren said: “We have proven that we can compete against any airline. We will have to wait and see what they do. It is not something we will lose any sleep over.”

read more here

Takeover target Entain upbeat

08:26 , Graeme Evans

Ladbrokes sports betting giant Entain had nothing to say on takeover interest from DraftKings today as it highlighted its own standalone growth prospects in an update showing a 23rd consecutive quarter of online growth.

The cash-and-shares offer from the US fantasy sports operator was tabled in mid-September, but Entain's FTSE 100-listed shares have fallen sharply since then.

Today's third quarter update revealed 10% growth in online net gaming revenues, despite comparisons with a strong performance last year. Its brands also include Coral and PartyCasino and FoxyBingo.

In the retail estate covering the UK, Ireland, Italy and Belgium, revenues were 1% higher as UK trading volumes continue their recovery towards pre-Covid levels. Overall, net gaming revenues were 6% higher at a constant currency rate.

Entain said its BetMGM joint venture in the US continued to deliver strong growth, with a 23% market share in sports betting and iGaming for the three months to August.

Jette Nygaard-Andersen, Entain's new chief executive, reminded investors that the company's total addressable market has the potential to more than triple to over $160 billion.

She added: “This will be driven by the significant opportunity in the US, where we are now challenging for the number one market position, our growth plans in other new and existing markets, and our strategy of entering into new areas of interactive entertainment.”

Shoppers make fewer supermarket visits as fuel shortages persist

09:02 , Joanna Bourke

Shoppers made fewer supermarket trips in the past month due to UK fuel shortages, with many staying off the roads and buying online instead, new Kantar data shows.

Closed off petrol pumps at a Shell petrol station in central London (Dominic Lipinski/PA) (PA Wire)
Closed off petrol pumps at a Shell petrol station in central London (Dominic Lipinski/PA) (PA Wire)

Scores of people have been seen queuing outside petrol stations recently, with visits to forecourts up 66% in the South of England on Friday 24 September, compared to the same date in 2020.

The reduced availability contributed to a drop in store visits, with the average household making 15.5 trips to them in the four weeks to October 3. That was the lowest monthly figure since February.

Read the full story HERE.

FTSE 100 under pressure

09:12 , Graeme Evans

The FTSE 100 has continued its choppy recent performance, with yesterday's 51 points rise followed by a decline of 48.95 points to 7097.90 in trading today.

AJ Bell's investment director Russ Mould said the energy crisis continued to put pressure on sentiment, while signs of further regulatory interventions in China are adding to investor jitters.

Mould said: “The Evergrande saga also continues to rumble on, with reports that some bondholders didn’t receive interest payments from the heavily indebted property group due on Monday.”

London-listed miners lost some of their momentum from yesterday, while British Airways owner IAG and Rolls-Royce fell back by 2%.

Outsourcing business Bunzl posted the biggest rise in the FTSE 100, up 2% to 2450p in the wake of yesterday's capital markets event held at London's Science Museum.

Wall Street focus

10:40 , Graeme Evans

Fears that earnings guidance could get “ugly” once Wall Street kicks off its reporting season later this week added fuel to recent energy-driven stock market wobbles today.

The FTSE 100 index tracked declines in the US and Asia overnight as investors positioned for a make-or-break period, starting with figures from JP Morgan Chase tomorrow and continuing next week with the likes of Procter & Gamble, Netflix and Tesla.

The overall picture from third quarter trading is likely to be strong, but all eyes will be on margins and supply chain pressures after analysts at Bank of America said they are braced for overall earnings expectations for 2022 to be revised lower.

Warning of the potential for guidance to be ugly, they said: “Supply chain has the limelight, but wages, China issues, and soaring commodity prices also pose risks to earnings.”

There was little respite today from energy markets, with Brent crude still at a three-year high of near to $84 a barrel. China's regulatory crackdown and more uncertainty over the future of debt-laden property firm Evergrande have added to the pressure.

The FTSE 100 index fell 38.12 points to 7018.73 as London-listed miners gave up their gains from yesterday. Rio Tinto was the biggest faller after declining 3% or 136.46p to 4964.54p and British Airways owner IAG and Rolls-Royce also eased 2%.

Bottling business Coca-Cola HBC posted the biggest rise, up 46p to 2424p as investors welcomed its plan to achieve net zero emissions across its entire value chain by 2040.

Outsourcing firm Bunzl clearly inspired City analysts after staging a capital markets day at London's Science Museum yesterday. Shares rose more than 1% to 2425p, with Peel Hunt retaining its “buy” recommendation and 2,800p target price.

Analyst Andrew Nussey said: “Our takeaway was the confidence in delivering growth. Near term, specific market headwinds and inflation remain manageable.”

The FTSE 250 index fell 35.61 points to 22,451.86, with online appliances chain AO World among those 3% lower.

Jobs crisis continues as vacancies top 1 million for second month in a row

11:26 , Oscar Williams-Grut

Britain’s jobs crisis shows no sign of easing, with new data pointing to a continued mismatch between demand for staff and workers.

Data from the Office for National Statistics, published on Tuesday, showed vacancies across the UK economy remain above 1 million. Open job postings rose by just over 300,000 to 1.1 million. Vacancies across the economy passed 1 million for the first time in history last month.

Demand for workers came despite a jump in payroll as companies fill roles. The number of payroll employees showed another monthly increase of 207,000 to hit a record high of 29.2 million in September. The number of people on the national payroll passed pre-pandemic levels for the first time since Covid-19 struck.

Read more here.

THG ties executive pay to green and sustainable goals

12:27 , Joanna Bourke

Online retail business THG today promised to tie executive pay to ambitious new climate targets, as management face a tense meeting with the City to discuss transformation plans.

THG - formerly The Hut Group - has announced a new sustainability plan, featuring targets covering everything from the company’s environmental impact to human rights in its supply chain.

Read the full story HERE.

OnTheMarket CEO Jason Tebb: London’s Covid property exodus is reversing

12:50 , Joanna Bourke

People who left London last year as part of the “race for space” during the pandemic are beginning to creep back into the capital, according to the boss of OnTheMarket.

OnTheMarket has seen high demand for homes (OnTheMarket)
OnTheMarket has seen high demand for homes (OnTheMarket)

Jason Tebb told the Evening Standard that he was seeing “anecdotal” evidence of pandemic movers returning to leafy postcodes in places like south London and Twickenham.

“Last year people sold up in London and they tried to find property outside,” he said. “They didn’t necessarily find a property to buy and rented. Now they’re coming back.”

While most of the demand is in outer boroughs, Tebb said central London “hasn’t become the ghost town people feared”.

Read the full story HERE.

Inflation fears hit the FTSE

13:15 , Oscar Williams-Grut

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, says: “The big squeeze on companies as higher costs take hold has again choked off gains for the FTSE 100, keeping the index down 0.5% by mid-morning. It’s the expectation that the Bank of England will step in to try and squash down inflation by raising interest rates by the end of the year, that’s weighing down stocks, given the financial markets have become so addicted to ultra-low rates and easy financing.

With vacancies hitting 1.1 million between July and September, the highest level since records began 20 years ago, it’s putting even more pressure on many companies which are already struggling to cope with the tourniquet of higher energy costs and supply chain problems.”

Read more about the City’s growing believe in a looming rate rise here.

Investors look confident in UK hotel market

14:46 , Joanna Bourke

Confidence in the hotels investment market looks to be improving in the UK, with buyers spending £935 million on sites in the last three months.

That spend was more than treble what was recorded in the third quarter a year earlier and is also 20.6% higher than the same period pre-pandemic, in 2019.

Property agent Savills said year to date investment stands at £2.7 billion, which is down on 2019, but it forecasts the full-year figure will reach around £4 billion. The 15-year average is £4.2 billion.

Read the full story HERE.

Amazon lets managers set post-pandemic working patterns

15:42 , Oscar Williams-Grut

Tech giant Amazon has given its latest update on post-pandemic workspace plans, with chief executive Andy Jassy telling staff “there is no one-size-fits-all approach”.

In a move that will impact office staff, including in London where the group’s Shoreditch HQ has capacity for about 5,000 staff, Amazon will leave teams to come up with working models.

In a message to employees, Jassy, who was promoted to lead the business earlier this year, added: “We’re going to be in a stage of experimenting, learning, and adjusting for a while as we emerge from this pandemic.”

Read the full story.

THG shares crash during capital markets presentation

16:46 , Oscar Williams-Grut

THG - formerly The Hut Group - is hosting a meeting with investors and analysts today to brief them on its tech platform Ingenuity. It doesn’t seem to be going well.

Shares have crashed since the meeting began at 2pm and the stock has closed the day down around 28%.

The backdrop is disquiet in the City about THG’s new strategy. The company has seen its share price drop by more than a third in a month after it announced plans to spin out its beauty business. Instead, THG will focus on Ingenuity — its promising, but still very new, e-commerce platform.

THG only floated last September and beauty is a major chunk of the company. The pivot has given many investors whiplash. A bearish note from The Analyst hasn’t helped either.

Read more here.

NatWest pledges £100bn in green loans

07:26 , Simon English

NATWEST today sets out its green credentials ahead of the COP26 environmental conference in Glasgow this November, pledging £100 billion of funding to fight climate change.

The bank, formerly known as Royal Bank of Scotland, claims in a report just out that moving to net-zero could not only save the environment, it could transform the economy.

It will soon launch a “green loan” for small and medium firms to encourage them to ditch cardon wherever possible .

read more here

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