Britain's mixed recovery and the shock of US inflation figures above 6% today kept the economic outlook at the forefront of investor thoughts.
Figures from the Office for National Statistics showed the UK economy advanced 1.3% in the three months to September, below expectations for 1.5% but offset by a stronger-than-forecast finish to the period.
The update kept up the pressure on the pound after the US dollar surged yesterday as an inflation figure at 6.2% brought forward expectations for the Federal Reserve’s first interest rate hike since the start of the pandemic.
The FTSE 100 index gained 1% yesterday, with Burberry, B&M European Retail and WH Smith among those reporting updates today.
Pound weakens after quarterly GDP miss
Johnson Matthey sinks on revenue warning, battery division sale
Elon Musk sells $5 billion-worth of Tesla stock
Burberry slides after warning about lower tourist numbers
Auto Trader buoyed by bumper used car market
FTSE closes higher
16:44 , Oscar Williams-Grut
The FTSE 100 has closed up 51 points at 7392.
Auto Trader, the car retailer, led the index for the whole day. Auto Trader rose 14% thanks to record half year profits.
At the other end of the index Johnson Matthey sunk 18% after announcing plans to sell its battery business and putting out a revenue warning.
B&M Retail dropped 5.3% despite reporting like-for-like sales growth of 14.7% for the past six weeks. The company warned of potential cost headwinds and inflationary pressures heading into 2022.
Burberry fell 4.9% after investors were spooked by a warning from the company that tourist numbers are still depressed, which is hitting sales.
That’s all from us on the blog today. Join us again tomorrow.
Auto Trader lifts FTSE
13:05 , Oscar Williams-Grut
Shares in Auto Trader, the car retailer, are helping the FTSE 100 higher in afternoon trade.
The FTSE is up 26 points to 7365. Auto Trader is top of the index, 12.8% higher thanks to record half year profits.
At the other end of the index is Johnson Matthey, down 18.5% after announcing plans to sell its battery business and putting out a revenue warning.
Burberry is down 5.8%. Investors have been spooked by a warning from the company that tourist numbers are still depressed, which is hitting sales.
11:43 , Simon Freeman
Heathrow has its first recruitment drive since the start of the pandemic as the reopening of the transatlantic US-UK corridor fuels a recovery in long-haul travel.
Britain’s biggest airport is hiring 600 frontline staff in security and engineering roles as it readies for a predicted rise in passengers ahead of next summer.
The announcement came as the hub reported the sixth consecutive month of passenger growth in October, with more than 100,000 travellers a day.
Young’s ‘back in action’ with profit - but boss warns price of a pint set to rise
11:30 , Naomi Ackerman
Young’s has swung back to profit after seeing sales return to 2019 levels, but the pub group’s CEO today warned that the price of a pint is set to rise.
Patrick Dardis told the Standard the 189-year-old pubco, behind venues including the City’s Lamb Tavern and the new Windmill in Clapham, is “back in action”.
Young’s revenues were down just 1% on 2019 levels in the half year to September 27, and topped them by 8% in the past 12 weeks.
In bad news for customers, however, Dardis said inflating wage bills, rising input costs and a return to 20% VAT will mean the “price of a pint will definitely have to go up” next year. The pubco is not planning to put up prices before Christmas.
Read the full story here
Johnson Matthey stock sinks
11:14 , Oscar Williams-Grut
FTSE 100 chemicals business Johnson Matthey lost a fifth of its value today after throwing in the towel on its battery business, cutting revenue guidance, and waving goodbye to its CEO.
Johnson Matthey, known for making catalytic converters that clean up car exhaust fumes, said it would sell its battery materials business after concluding it could not compete with rivals.
The company said returns “will not be adequate to justify further investment” as the market was “rapidly turning into a high volume, commoditised market.”
The company had once hoped battery technology for electric vehicles could replace its reliance on catalytic converters. Johnson Matthey set up the battery division in 2012.
It said today: “Whilst demand for battery materials is accelerating, so is competition from alternative technologies and other manufacturers.”
King’s Cross estate has become carbon neutral
11:10 , Simon Freeman
The huge King’s Cross estate has become carbon neutral, the firm behind the major regeneration project has said.
Every building owned by King’s Cross Central Limited Partnership, including offices, shops and restaurants across 67 acres, has been certified as a carbon neutral development.
Energy supplies to the site are 100% renewable.
There are also plans in place to plant a series of new UK forests 7.5 times the size of the estate. It is a move aimed at offsetting the embodied carbon of new and future buildings at King’s Cross.
Claudine Blamey, head of sustainability and digital strategy at King’s Cross, said: “This is a significant milestone in our journey to become net zero.
“We are incredibly proud to achieve carbon-neutrality and our universal approach to our carbon footprint means we leave no stone unturned.
“This is part of our commitment to set a precedent of best-in-class climate action in the real estate sector and encourage others to use their funds in the most effective manner to have the greatest impact.”
Booming used car market and online shift rev up Auto Trader
11:04 , Naomi Ackerman
Auto Trader saw shares surge as much as 10% this morning after reporting record half-year profits on the back of Britain’s used car market boom.
The FTSE 100 online car marketplace, which has 436,000 mostly second-hand for sale and a market cap of £5.9 billion, said revenues soared by 82% to £215 million in the six months to end September. Operating profits were up 121% year-on-year to just over £151 million.
The Standard spoke to chief executive Nathan Coe... Read the full story here
Elon Musk sells $5bn Tesla stock slice
10:22 , Joanna Bourke
Elon Musk, the chief executive of Tesla who this month held a Twitter poll on whether he should sell 10% of his stake in the electric car maker, has unloaded $5 billion (£3.7 billion) of stock in the firm.
Filings show that the billionaire entrepreneur has disposed of more than 4.5 million shares this week.
Bloomberg said on the most recent sales the filings didn’t indicate that they were pre-planned.
WH Smith upbeat despite loss
09:54 , Oscar Williams-Grut
Smiths today reported a trading loss of £55 million in the 12 months to the end of August and a total pre-tax loss of £104 million. Revenue sunk 13% to £886 million, dragged down by a 27% slump in travel revenues.
“Clearly the impact of Covid is still evident in the numbers we’ve reported,” CEO Carl Cowling told the Standard.
The newsagent, which also owns airport gadget shop InMotion and online greetings card retailer Funkypigeon.com, said travel was already rebounding and has made a big bet on airport expansion. Earlier this year it announced plans to open 100 new shops in airports over the next three years, with the majority in North America. Smiths has also won 30 bids to open new tech stores in 14 airports across the UK, including two concessions each in Gatwick, Heathrow, and Stanstead.
“Air travel has always consistently grown as the world’s population has grown,” Cowling said. “Business travel will recover at a slower rate but our brand is attuned to the leisure customer.”
Travel revenues are already at 84% of pre-pandemic levels and Cowling told the Standard sales had picked up even further since US travel restrictions were dropped at the start of this week.
Aviva on track to hand back £4bn to investors
09:36 , Simon English
AVIVA today set out a strong case for its defence against activist investor Cevian, saying it is on track to hand back at least £4 billion to shareholders.
Cevian, one of Europe’s biggest activist investors, has taken a 5% stake and plans to shake-up the insurer. It thinks Aviva is undervalued and wants to see £5 billion returned to investors.
Aviva might get there yet, depending on the completion of a deal to sell its Polish arm. It will give the City a clearer picture at full year results next March.
Auto Trader leads FTSE 100 higher
09:04 , Graeme Evans
Hot on the heels of Marks & Spencer and ITV yesterday, it was the turn of Auto Trader to deliver a double-digit percentage rise in its share price today.
The FTSE 100-listed stock surged 11% or 65.8p to 686p, having reported its highest ever six-month profits on the back of the used car market boom and pandemic-driven shift online.
There were sharp share price moves in the other direction, however, with Johnson Matthey down 17% after indicating that full-year results will be at the lower end of expectations amid supply chain and labour pressures.
It is also pursuing the sale of its battery materials business after deciding the returns were not adequate to justify further investment.
Shares in Burberry and B&M European Retail fell 8% and 6% respectively after their interim results. The FTSE 100 index improved 21.43 points to 7361..58, aided by a strong performance for mining and banking stocks.
Pound weakens after GDP update
08:29 , Graeme Evans
The pound came under more pressure today, trading at below 1.34 versus the US dollar after the latest GDP figures painted a mixed picture on the UK recovery.
Former monetary policy committee member Andrew Sentance tweeted: “Swings and roundabouts in latest UK GDP figures. Big picture is slightly weaker than the Bank of England was expecting in Q3 despite 0.6% rise in September.”
The figures go some way to supporting the Bank of England's surprise decision last week not to increase interest rates from 0.1% to 0.25%.
That accelerated the pound's reversal from the $1.38 seen in mid-October, with the greenback strengthening overnight after US rate rise expectations were brought forward by the country's 6.2% inflation figure for October.
Rivian surges, Musk sells Tesla shares
08:16 , Graeme Evans
Wall Street scrambled to buy shares in Rivian Automotive after the electric car maker yesterday made its debut on Nasdaq at an initial valuation of $66.5 billion (£49 billion).
The start-up, which only started deliveries of its first R1T pickup truck in September, briefly touched the $100 billion threshold before shares closed 29% higher to give the Illinois-based company a similar market value to one of its major shareholders, Ford.
Rivian is seen as a rival to Tesla, which was recently valued at more than $1 trillion. Tesla shares closed 4% higher last night to reverse losses of 16% in the previous two sessions as it emerged that boss Elon Musk had sold around $5 billion of stock.
The move came days after Musk's Twitter followers voted in favour of him selling 10% of his stake, worth about $21 billion.
Burberry sales bounce back to pre-Covid levels
08:09 , Joanna Bourke
Burberry first half sales have recovered to pre-pandemic levels, but the fashion firm is still suffering from weaker tourism in certain regions.
The FTSE 100 British retailer said revenue in the six months to September 25 reached £1.2 billion, up from £878 million a year earlier when lockdowns and travel restrictions hurt the luxury goods sector.
The firm added that the performance had recovered to match 2019 levels.
Read more HERE.
UK economy nearly back to pre-Covid levels
07:52 , Simon English
THE UK economy continued its recovery from the Covid-19 slump over the summer, growing at 1.3% between July and September.
That’s a slower pace of recovery than the previous quarter, due to supply chain issues that have hurt retailers and other businesses including car makers.
However, the figures mean the economy is not far off recovering all of its pandemic losses. City economists not that is a striking achievement, given that it took five years to rebound from the global financial crisis of 2008.
Inflation fears stalk markets
07:38 , Graeme Evans
European markets shrugged off yesterday’s higher-than-expected US inflation figure, but Wall Street was not so resilient after the Dow Jones Industrial Average fell 0.7%.
The decline came as the consumer prices index for October hit the highest level in 31 years at 6.2%, with core prices also lifting to 4.6% to add to concerns that price pressures will last longer than US Federal Reserve policymakers had been hoping.
Michael Hewson, chief market analyst for CMC Markets, said: “The fear is that consumers as well as markets may have to absorb further price rises, with all the inherent risks that brings for company profit margins and consumer inflation expectations.”
The dollar gained 1.2% against the pound in the aftermath of the inflation figures as Wall Street brought forward its expectations for a first rise in interest rates to next summer.
Strong earnings updates and a surge for several mining stocks after the inflation figures triggered a flight to gold helped the FTSE 100 index to close 1% higher last night.
The top flight is expected to open 20 points lower at 7320, with a weak performance in Asia markets adding to expectations for a more downbeat session in London today.
Better-than-expected updates from a number of consumer-facing stocks underpinned yesterday's strong session, sending shares in Marks & Spencer up 16.5% and ITV by 15%.
Their optimism was highlighted by today's GDP figures, where the figure for September of 0.6% came in higher than City forecasts for 0.4% growth. The performance across the third quarter came to 1.3%, which compares with the the 5.5% rebound seen the previous quarter.