Banking stocks slipped further today, as shares in Deutsche Bank plunged in Frankfurt.
Elsewhere, UK economy’s robust start to the year continued today as retail sales beat expectations and consumer confidence hit a one-year high.
The Office for National Statistics said sales volumes rose by 1.2% in February as it also revised its January growth estimate to 0.9% from 0.5% previously.
Meanwhile, GfK’s measure of consumer confidence showed a reading of minus 36, up from minus 38 previously as expectations for the UK economy continue to improve.
FTSE 100 Live Friday
Fresh banking slump hits FTSE 100
Retail sales figures beat forecasts
Wetherspoon cheer as trading improves
Demand for West End office space bounces back in 2022, but rest of London lags behind
18:10 , Daniel O'Boyle
Demand for office space is again outstripping supply in the West End, but it is the opposite story everywhere else in London, according to new figures.
Statistics from Colliers found that the amount of office space occupied in the West End increased by over 1 million sq ft in 2022, the first increase since the pandemic, but it decreased by over 1.6 million sq ft in London as a whole.
Occupation levels were down from 2021 in every non-West End area, with City having the sharpest drop in occupied space.
FTSE closes at 7405.45
16:37 , Daniel O'Boyle
The FTSE 100 closed at 7405.45 today, down by 1.3%, after a small late-day rally saved it from greater losses.
The index of blue-chip London companies fell as low as 7336.2, and was at 7372 just over an hour before markets closed. However, a minor improvement in share prices late in the day
Banking stocks led today’s slide, with Standard Chartered down almost 6% and Barclays down 4.7%.
Bucking the trend, Reckitt Benckiser and British American Tobacco were both up.
Despite the tough finish, the FTSE finishes the week up 1% from last Friday, when chaos in the banking sector caused the index to plunge to four-month lows.
Business groups hit back at Bank boss for saying price rises ‘hurt people’
16:05 , PA
Business campaigners have warned over business failures and job losses if companies follow the Bank of England chief’s suggestion not to raise prices above inflation.
Governor Andrew Bailey asked retailers to think twice before setting prices above the rate of inflation because it risks embedding higher prices into the economy.
In an interview with BBC Radio 4’s Today programme, Mr Bailey said higher inflation “hurts people and it particularly hurts the least well-off in society”.
Retail sales bounce points to resilience of UK economy but reveals shifting shopping patterns
15:29 , Michael Hunter
Discounts in department stores around Valentine’s Day meant bargain-conscious sweethearts helped retail sales rise by more than expected in February.
The month-on-month increase of 1.2% from January was notably stronger than the 0.2% forecast, in another sign of the resilience of the UK economy, which came alongside separate numbers showing growth in the service sector.
The retail figures, out this morning from the Office for National Statistics, will give heart to the hawkish interest-rate setters at the Bank of England, who plumped for a quarter-point rise in the cost of borrowing to a 14-year high of 4.25% yesterday.
US shares down, but faring better than European counterparts
14:34 , Daniel O'Boyle
Shares in US companies have fallen since trading opened in Wall Street, but they have done far better than their UK counterparts.
The S&P 500 slipped 0.2% to 3941, while the Dow Jones is down 0.3% to 32020. The Nasdaq composite is also down by 0.3%, to 11755.
Those declines are much less sharp than the drops in London and elsewhere in Europe. The FTSE 100 is currently down 1.4% to 7394.77, while the Euro Stoxx 50 is down by 2% to 4123.10.
"Worries about contagion are again rearing up”
13:51 , Daniel O'Boyle
Susannah Streeter, head of money and markets, Hargreaves Lansdown says new worries about banking sector contagion have emergedm as Deutsche bank shares plunged today.
“Just as hopes had risen that contagion would be contained, banking stocks in Europe have been battered again by fears that fresh problems could be lurking,” she said. “Worries about contagion are again rearing up.”
She added that the latest round of interest rate rises “could make a precarious situation worse for some smaller banks”.
US shares set to follow FTSE down
13:11 , Daniel O'Boyle
Shares in US businesses are set to fall after a tough start to trading in Europe today.
Futures in all the major US indices are down, after fears about Deutsche Bank’s credit default swaps - which reflect investors’ level of concern that it could fail to pay its debts - led to banking shares across Europe falling.
Dow Jones futures are down 0.8%, while S&P 500 futures are down 0.7% and Nasdaq futures lost 0.4%.
Volatility continued for First Republic Bank, which was again the biggest premarket faller.
CMA: £57bn Microsoft Activision takeover will not harm console gamers
12:59 , Daniel O'Boyle
The Competition and Markets Authority (CMA) is set to drop many of its concerns about Microsoft’s takeover of Call of Duty and World of Warcraft publisher Activision Blizzard, as it no longer believes the $68.7 billion (£57 billion) deal would hurt the UK console gaming market.
The monopolies watchdog now says that the deal “will not result in a substantial lessening of competition in relation to console gaming in the UK”.
Initially, the CMA warned that the mega-merger could substantially reduce the competition between Xbox and PlayStation in the UK, as Microsoft may choose to make popular Activision games like Call of Duty exclusive to its own Xbox consoles.
Speed is key to the UK’s race for energy independence
12:10 , Daniel O'Boyle
President Biden’s Inflation Reduction Act has triggered a wave of new green investment in the US. The EU is responding, and now UK ministers must decide how we can keep up.
We may be unable to provide the scale of subsidies and tax cuts on offer in the US, but we do have other strengths, Sam Laidlaw writes.
“With some simple streamlining of regulation and policy, we can accelerate delivery of the secure, clean and affordable energy supplies needed to spur new business investment,” he says.
Game of Thrones Fabergé egg helps Gemfields hatch record revenue
11:58 , Daniel O'Boyle
The $2.2 million sale of a Game of Thrones Fabergé egg helped the owner of the world-famous jewellery brand to report record annual revenue today and extend its run of payouts to investors.
Gemfields, the London-listed precious stone producer, is also working on a Fabergé tie-in with another world-famous screen franchise: James Bond.
The woman who holds the second-worst job in Britain
11:24 , Chris Blackhurst
IF Tim Davie has the worst job in Britain, who has the second? It must be Dame Sharon White, boss of John Lewis, Chris Blackhurst writes.
“In a way they’re linked, the BBC and the department store and Waitrose group,” he says. “They both hark back to a bygone age of honest toil and solid values.
“The BBC had its Reithian mission to inform, educate and entertain which it delivered over tea to countless wireless sets on sideboards behind lace curtains, all from John Lewis, tea set included.”
Bank boss warns rates will rise again if businesses hike prices
Bank of England boss Andrew Bailey has warned businesses that raising prices in the UK could lead to higher inflation which will hurt the “least well off”.
Interest rates were lifted to 4.25 per cent from 4 per cent on Thursday after policymakers on the Bank’s nine-strong Monetary Policy Committee (MPC) voted seven to two for the quarter-point rise following a surprise jump in inflation last month.
Chancellor Jeremy Hunt said he supports the Bank’s decision to hike rates further as “the sooner we grip inflation the better for everyone”.
Banking slump leaves FTSE 100 down 1.7%
10:27 , Graeme Evans
Shares in the embattled banking sector were hit by yet more heavy selling today, led by Deutsche Bank after the cost of insuring against its default surged overnight. Its Frankfurt-listed shares fell 11% and are down over 20% in the past month.
Barclays and Standard Chartered also slid 6% in London, continuing the heavy falls seen across the industry since the demise of Silicon Valley Bank and Credit Suisse.
The pressure comes despite stronger balance sheets leaving European banks in a different place to where they were in the financial crisis 15 years ago.
To make matters worse for investors, the economic outlook is mired in uncertainty after US and UK interest rates rose again this week in a bid to tackle lingering price pressures.
Higher rates are normally a positive for bank valuations, but NatWest fell 13.9p to 254.2p alongside Barclays 7.9p lower at 131.8p and Standard Chartered down 30.8p to 601.6p.
The FTSE 100 index slumped 1.7% or 132.1 points to 7367.46, reducing gains for the week to 30 points as the rally since UBS’s weekend rescue of Credit Suisse fades.
Among other heavy fallers, GSK dropped 50.4p to 1387.4p and energy giants BP and Shell weakened 2% after the Brent crude price dipped back below $75 a barrel.
The FTSE 250 index told a similar story as the UK-focused benchmark weakened 1.4% or 257.31 points to 18,472.65, its lowest level since November. Airline stocks Wizz Air and easyJet were down 114p to 2615p and 15.5p to 461.5p respectively.
The Warhammer miniatures firm Games Workshop defied the pressure, with shares up 35p to 9055p after declaring a dividend of 120p a share from “truly surplus cash”. It takes the year-to-date total to 415p or £137 million, resulting in a yield of around 4.6%.
Private sector growth dips in March
10:08 , Daniel O'Boyle
The UK private sector grew again in March, but came in below expectations, according to new figures from S&P Global.
The UK PMI Composite Output Index dipped to 52.2 in March, from 53.1 in February. A figure above 50 in the index represents growth.
The growth was driven by services, while the manufacturing sector declined.
Input price inflation, meanwhile, fell to a two-year low.
“Many firms noted that lower commodity prices and falling freight rates had been passed on by suppliers,” S&P said.
Wetherspoons resumes staff bonus with boss Tim Martin optimistic price pressures will ease
09:55 , Daniel O'Boyle
JD Wetherspoon boss Tim Martin today said price pressures in the pub trade are “ferocious” but he offered optimism that the worst is past.
For the half-year, profits crashed 91% to £4.6 million when compared to 2019, a sign of the strain on an industry still recovering from Covid.
The company is pruning its estate – it has 843 pubs with around 25 up for sale.
Sales in the period were up 5%, and the pubs are well stocked with ales and staff.
City Comment: Wetherspoons is a national treasure
09:43 , Simon English
WARREN Buffett is one of the few business people who likes to brag about how much tax his enterprises pay, and to say he expects the bill to go upwards. (Others tend to see the tax code as an exercise in what you can get away with.)
Tim Martin at JD Wetherspoon may not regard paying tax as a corporate pleasure, but he does point out that the pubs are more than pulling their weight.
In 2019, the year before the pandemic, the business paid tax of £764 million. That is one pound in every thousand of UK government revenue.
Which means, as Buffett would say, that if just another 999 taxpayers stumped up, the rest of us wouldn’t have to pay a penny. Zilch.
In the last ten years, the company, its staff and customers have paid tax of £5.6 billion.
Looked at in that context, ‘Spoons is something of a national treasure. You don’t have to like the cut of Tim Martin’s jib or indeed the pubs to think so. If his views on Brexit bother you, don’t go.
Moreover, after three dry pandemic years, staff bonuses are back. In the first half of the year bonuses and shares worth £15 million were handed out.
This is just as John Lewis, supposedly the model for doing the right thing, was forced to slash its staff bonus to zero.
Perhaps the government should do an annual league table of the most useful businesses in Britain. They could add points for tax paid, subtract some for environmental impact, make a guess on staff wellbeing.
Wetherspoons would be far higher up that league than its critics might expect.
Deutsche Bank shares tumble amid credit default swap fears
09:29 , Daniel O'Boyle
Shares in Deutsche Bank have fallen more than 8% in Frankfurt this morning, amid heightened concerns about its default risks.
The bank’s credit default swaps - which reflect investors’ level of concern that it could default on its debts - are approaching their highest levels since the Global Financial Crisis, after a sharp rise in the past day.
Deutsche Bank shares are now down 24% in the last month.
Billionaire Bitcoin advocates lose $1 billion from their wealth
09:27 , Simon Hunt
Two billionaire Bitcoin advocates lost a combined $1 billion from their wealth as markets closed in New York last night after they faced separate probes into whether their businesses broke the law.
Jack Dorsey, founder of Twitter and chair of payments fintech Block, lost around $525 million (£428 million) after notorious activist investor Hindenberg Research said it was shorting the company’s shares after uncovering evidence that its platform facilitated fraudulent payments. Block shares tanked 15% yesterday and were down a further 3.3% in pre-market trading today.
Brian Armstrong, founder of crypto exchange Coinbase, lost a similar sum from his wealth after the firm revealed the US markets regulator was mulling taking enforcement action against it over possible security law violations. Coinbase shares sunk 14% to $66.
Smiths Group shares rise after upping revenue guidance
09:07 , Daniel O'Boyle
Industrials business Smiths Group today upped its revenue guidance for this year, as it aims to expand into making new types of products to cash in on “long-term megatrends”.
The Westminster-based firm, founded in 1851, said it now expects revenue to rise by 8% in 2023. It’s the second time this year that Smiths has raised revenue expectations, also doing so in January.
The maker of products including explosive detectors, train parts and antenna systems said future growth plans would involve expanding into more product lines that are similar to its existing business areas. This, it said, would help the firm profit from the “megatrends” of energy transition and sustainability.
In the six months to 31 January, Smiths made £241 million in profit, up 27.4%, while revenue jumped to £1.50 billion with all divisions reporting growth.
“While we are still in the early days of executing our plan, we are pleased with the progress,” CEO Paul Keel said.
Smiths Group shares are up by 16.5p to 1,732p.
FTSE 100 under pressure, 3% jump for JD Wetherspoon
08:24 , Graeme Evans
The FTSE 100 index has fallen by a bigger-than-expected 1%, down 77.63 points to 7421.97 amid fragile stock market conditions.
Shares under pressure included Barclays, which dropped another 3% or 4.25p to 135.5p and HSBC after declining 9p to 539.2p.
Engineering group Smiths rose 28p to 1743.5p after forecasting annual revenues growth of at least 8%, up from January’s 7% estimate and 4-4.5% at the beginning of the year. The interim results showed operating profit growth of 27.4% and a 5% hike in dividend to 12.9p a share.
In the FTSE 250 index, half-year results helped JD Wetherspoon shares jump 3% or 40.6p to their highest level since last summer at 621.6p.
The pub chain returned to the black with a surplus of £4.6 million but profits remains well down on pre-pandemic levels. However, chairman Tim Martin said trade for the last seven weeks was 9.1% above the equivalent period in 2019 and 14.9% above the equivalent period in the last financial year.
Richard Hunter, head of markets at Interactive Investor, said: “Prospects for the group, like its margins, remain finely balanced, with the market consensus of the shares as a hold suggesting that investors will cautiously await more fruitful developments.”
Games Workshop hands shareholders £40 million divi
08:23 , Daniel O'Boyle
Board game maker Games Workshop has handed a further £40m in dividends to shareholders, bringing its total dividends this year to £138m.
The maker of Warhammer 40,000 will pay a dividend of £1.20 per share, thanks in part to a £12m French tax rebate. It said this was part of its policy of “distributing truly surplus cash”.
The company also said its trading for the three months to the end of February were in line with expectations.
FTSE 100 remains under pressure amid rates uncertainty
07:46 , Graeme Evans
European stock markets are poised to open lower as the uncertain mood continues at the end of a week dominated by interest rate decisions in the UK and United States.
US markets recovered some ground yesterday as the Nasdaq Composite rose 1% and the S&P 500 index finished 0.3% higher.
The FTSE 100 index closed 67 points lower last night and is forecast by CMC Markets to open down another 40 points at 7459 this morning.
CMC’s chief market analyst Michael Hewson said: “Equity markets on both sides of the Atlantic have experienced a great deal of chop these past few days as investors look for clues as to where we go next when it comes to an overall sense of direction.
“Over the past week, we’ve seen central banks raise rates again, however, there appears to be a sense that we may well have seen or be close to the peaks when it comes to the rate hiking cycle.
“This is being reflected in sharp declines in short-term yields, however, markets also appear to be pricing in the prospect of rate cuts this year. This seems somewhat premature and something that stock markets have yet to price.”
Tui aims to pay down debts with discounted share offering
07:36 , Daniel O'Boyle
Travel agent Tui aims to raise €1.8 billion by offering shares at a 40% discount, so it can pay down the huge debts it built up during the pandemic, when it had to be bailed out by the German government.
The company will offer 328.9 million new shares at a price of €5.55 per share, a sharp discount from market price.
As of the end of 2022, Tui’s net debt was €5.3 billion.
Consumer confidence shows recovery
07:18 , Graeme Evans
The latest consumer confidence report from GfK continues to point to poor sentiment as wages fail to keep pace with price growth.
However, a reading of minus 36 is the best level in a year and up from the record low of minus 49 in September and February’s minus 38.
The outlook for personal finances weighed on today’s score, with further pressure looming after yesterday’s latest hike in interest rates.
Retail sales stronger than forecast in February helped by discounting in department stores
07:16 , Michael Hunter
Retail sales fell year-on-year in February, but not by as much as economists expected, in another sign of resilience in the UK economy a day after the Bank of England raised interest rates, sticking with its fight against inflation.
Sales in the month were down by 3.5% year-on-year, less than the 4.7% forecast and the 5.1% decline in January. On a Month-on-month basis, they rose by more than expected, up 1.2% rather than the 0.2% forecast and January’s 0.9% monthly rise.
The Office for National Statistics said Non-food stores sales volumes rose by 2.4% over the month because of strong sales in discount department stores. Fuel sales volumes fell by 1.1% in February 2023 following a rise of 1.1% in January 2023 when rail strikes may have increased car travel.
The numbers follow the BoE’s determination to vote through a quarter-point rate rise to 4.25% yesterday as it prioritised its bid to tame inflation -- which was unexpectedly stuck in double digits, at 10.4% this week – over worries about turmoil in parts of the global banking sector.