FTSE 100 Live: US inflation hits 31-year high, Marks & Spencer, ITV and Halfords shares surge after updates

·15-min read
 (ESI)
(ESI)

Marks & Spencer's army of small shareholders were cheering today after the retailer's better-than-expected interim results sent shares surging by as much as 16% today.

With sales back above pre-pandemic levels, chief executive Steve Rowe is now forecasting annual underlying profits in the region of £500 million. He said: “The hard yards of driving long term change are beginning to be borne out in our performance."

Halfords also surged 11% after e-bike sales led to an upgrade to its profits guidance, while ITV shares jumped as chief executive Carolyn McCall said the broadcaster is on track for the highest advertising revenues in its 66-year history.

Inflation figures in the United States will provide a major test for markets later today amid expectations the consumer prices index will hit a 31-year high.

FTSE 100 Live Wednesday

  • FTSE closes higher on strong earnings and strengthened dollar, Wall Street falls

  • US inflation hits 31-year high

  • Marks & Spencer shares surge on recovery optimism

  • ITV predicts highest advertising revenues in its 66-year history

  • Halfords sales boosted by e-scooters demand

FTSE rises on strong earnings and strengthened dollar

17:37 , Oscar Williams-Grut

The FTSE 100 has closed 66 points higher - almost 1% - at 7340.

The index was helped higher by strong earnings from ITV, which topped the index after predicting the highest ad revenues in its 66-year history.

A strong dollar also helped companies that earn a large part of their revenues in the US. The dollar strengthened 0.7% against the pound after US inflation blew past forecasts to its highest rate since 1990. That has raised expectations of an interest rate rise at the Fed, which would make dollars more valuable.

Pearson, which makes a lot of its revenue selling education products in the US, was the second biggest riser on the FTSE. Fresnillo, the Mexican gold and silver miner, was just behind.

Stocks fell on Wall Street as a rate rise would be bad for fast growing tech stocks and others that rely on cheap money. The tech heavy Nasdaq was the worst hit, down 0.6%.

Richard Flynn, managing director at Charles Schwab UK, said: “Whilst a return to 1970s-style inflation is unlikely, there is a worrisome scenario in which persistently sharp price increases could impact economic performance in some sectors of the economy. When inflation is high, consumer spending on products ranging from clothing to cars tends to weaken.”

On the mid-cap index in London, Marks & Spencer closed up 16% after returning to profit and upgrading its profits for only the second time in history.

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

Electric car business Rivian surges on debut

16:58 , Oscar Williams-Grut

Rivian, a US electric car maker that competes with Tesla, has seen its shares surge in its IPO.

CNBC and Bloomberg are reporting that shares are indicated to open at $125 a pop, versus an offer price of $78. That would value the business at $106 billion.

The sky-high valuation comes despite the fact that the business made a loss of $1 billion in the first half of 2021 and only delivered its first car last month. However, Rivian has over 50,000 pre-orders from customers on its books and Amazon has placed an order for 100,000 of its electric trucks by 2025.

Bullish investors hope it will be the next Tesla, which recently crossed $1 trillion in market cap.

US inflation ‘a mess'

14:20 , Oscar Williams-Grut

Investors are reacting the US inflation hitting a 31-year high. The 6.2% CPI print beat already pretty high expectations and piles more pressure on the US Federal Reserve to raise interest rates.

Many in the market feel the Fed and its chief Jay Powell have dropped the ball on inflation. Neil Wilson, chief market analyst at Markets.com, calls today’s reading “a mess”.

Not everyone believes the Fed is getting it wrong: Dan Boardman-Weston, CIO at BRI Wealth Management, said: “Markets are understandably nervous about the implications of this and it’s fair to say that inflation is going to keep moving upwards over the coming months. We think the Fed is correct in their interpretation that this is transitory though.

“Base effects, global supply chain issues and pent-up demand are all fuelling the current surge but we see all of these factors as being transitory. The issue many have though is what the definition of transitory actually is and whether the Fed will perform a volte-face and end up tightening policy too much. The tapering of asset purchases may be accelerated but the Fed will be reluctant to aggressively respond to these inflationary pressures.”

Today’s data is moving markets in the meantime. Gold has jumped 1.3% to $1,854 an ounce and bonds have sold off, with US 10 year yields jumping above 1.480%. 30 year real yields (TIPS) touched a record low -0.595% and 10 year TIPS are at -1.224%.

Reopening boom sends US inflation to three decade high

13:49 , Simon Freeman

Prices paid for consumer goods in the US were up an eye-popping 6.2% year-on-year in October, the biggest annual jump since 1990.

Data released by the Labor Department showed a 0.9% rise from September, the biggest one-month rise in four months.

The rocketing inflation - above all forecasts - send stock future down, while the yield on the 10-year Treasury bond rose and the dollar strengthened.

The jump was put down to businesses raising prices for energy, housing, food and transport as supply chain bottlenecks and labour shortages drive up costs amid rising demand from the pandemic recovery.

Soaring prices of second-hand cars and semi-conductors fuelled the rise. which will put pressure on the Fed to raise ultra-low interest rates sooner than expected and accelerate the tapering of its bond-buying programme.

In China, inflation at the factory level last month increased by the most in 26 years, while consumer prices in Brazil sped up by more than forecast.

The challengers banks who fell to earth

12:42 , Oscar Williams-Grut

In theory, a new breed of “challenger” bank is going to shake-up the staid old industry. Is going to wow us all with technology, eating the lunch of Barclays, NatWest et al along the way.

Banks with whizzy names – Monzo, Tide – will show the tired old lenders how to do it in the digital age.

Some of the us think we have seen this movie before.

Twenty years ago the first lot of new banks – Egg, Intelligent Finance – were going to do the same. If you’ve never heard of either that is exactly the point.

Read more here.

Velocys gets lift off from airline fuel deals

11:36 , Simon Freeman

British Airways owner IAG and US giant Southwest Airlines today inked deals to buy hundreds of million gallons of carbon-negative jet fuel from a London-listed tech start-up.

Shares in Velocys, a spin-out from Oxford University now based on the bank of the River Humber in Lincolnshire, soared by more than 40% on AIM as the deals were announced.

The agreements were described as a milestone for sustainable aviation.

Full story here

‘Whoppers’ boost Sir Martin Sorrell’s S4 Capital

11:34 , Oscar Williams-Grut

Revenues continue to surge at Sir Martin Sorrell’s new digital advertising company S4 Capital, which today said it plans to double in size by 2024.

S4 said like-for-like revenue was up 56% in the third quarter to £178 million. Gross profits were up 42% to £144 million. Trading was above previous guidance of revenue growth of 40%.

The business, which specializes in digital advertising and services like data, is benefiting from winning what it calls “whoppers” - major clients that deliver over $20 million in revenue to the business. S4 now has six “whopper” clients, up from two this time last year. New client wins this year include Facebook and HP. Google, BMW Mini, and Mondelez are other “whoppers”. The likes of Amazon, Netflix and Burberry are customers too.

Read more.

Housebuilding support, ASOS sets out growth plans

10:47 , Graeme Evans

Housebuilders are enjoying another boom year of trading, although for investors the worry persists that the roof is about to fall in on the sector.

Those fears relating to cost pressures and rising mortgage rates have left shares in heavyweights Persimmon and Taylor Wimpey close to where they started 2021.

Analysts at Liberum said today they believe this under performance is unjustified, particularly as the sector continues to report strong order books going into 2022 and is also showing signs of being over the worst of the price pressures.

Based on this favourable outlook, Liberum reported significant potential upside for shares across the sector, with its top picks being Persimmon and MJ Gleeson.

Top flight-listed Persimmon benefited from the broker's support today by improving 2% or 46p to 2696p, while Taylor Wimpey added 2.1p to 156.1p and Berkeley rose 49p to 4280p.

Their progress came during a positive session for the FTSE 100 index, which rallied by a bigger-than-expected 40.27 points to 7313.97. ITV surged by 11% after its third quarter update, while there was also support for BP after the price of Brent rose back above $85 a barrel following a decline in US crude stocks.

Marks & Spencer's strong interim results and 14% rise for its shares meant the retailer stole the limelight in the FTSE 250 index as the second tier benchmark climbed 100.31 points to 23,467.20.

ASOS shares were 63p higher at 2640p, a gain of 2% as interim boss Mat Dunn set about rebuilding the City's confidence in the former high-flying AIM-listed stock.

The group saw sales leap during the pandemic, but warned last month that supply chain problems and other headwinds will hit profits.

Dunn today met analysts and investors at a capital markets day, where he outlined plans for £7 billion worth of sales over the next 3-4 years and profit margins of at least 4%.

This represents a compound annual growth rate of 15-20%, supported by own-brand offerings and a plan to double the size of sales in the US and Europe.

Halfords lifts profits outlook as CEO says bike retailer’s ‘strategic transformations are landing’

10:24 , Naomi Ackerman

Halfords saw shares surge as much as 13% this morning after the bike retailer upgraded full-year profits forecasts and said its supply chain struggles are “beginning to ease”.

The listed firm, which also sells car parts and does repairs, forecast underlying profits of £80 - £90 million, up from previous guidance of above £75 million.

It reported revenues of £695 million for the six months to October - up almost 9% on the same period last year - boosted by rising demand for e-bikes and e-scooters. E-vehicle sales were up more than 140% on 2020, while electric car servicing was up 120% year-on-year.

Boss Graham Stapleton told the Standard the profits upgrade reflects the “strategic transformations” the company is making...

Read the full story here

Pay row looms at Dunelm

10:09 , Simon English

The chief executive of Dunelm is under pressure from a shareholder advisory group over his pay, which it dubs “excessive”.

PIRC, the Pensions & Investment Research Consultants, is telling clients to vote against the retailer’s remuneration report at the next AGM.

CEO Nick Wilkinson saw his pay this year quadruple to more than £4 million thanks to £3.4 million in bonuses.

PIRC says this pay is “considered excessive”.

read more here

Marks & Spencer shares jump 15%

08:59 , Graeme Evans

Marks & Spencer now languishes in the FTSE 250 index, but its shares were the London market's star attraction today after surging 15% following half-year results.

The retailer's shares jumped 28.05p to 222.5p — much to the delight of the company's long-suffering army of retail shareholders — after M&S upgraded its full-year expectations on the back of interim figures showing sales and profits above pre-pandemic levels.

The former blue-chip stock is now at its highest level since the start of 2020.

Richard Hunter, head of markets at Interactive Investor, said the results show a company going full throttle: “Marks & Spencer was one of many companies where the pandemic forced accelerated change and the results are beginning to bear fruit.”

There was also a jump of 31.6p to 310.2p for Halfords in the FTSE All-Share after it upgraded profit forecasts to £80-90 million due to “exceptionally strong” sales of e-bikes and e-scooters.

The FTSE 100 index rose 22.64 points to 7296.68, led by a rise of 8% for ITV after the broadcaster's upbeat third quarter trading update. BP also rose 2% as the price of Brent rose back above $85 a barrel following a decline in US crude stocks.

M&S topped the FTSE 250 index, which stood 73.02 points higher at 23,440.16.

Housebuilding shares backed for better 2022

08:28 , Graeme Evans

Shares in London-listed housebuilders are below where they started 2021, a performance that Liberum said today is hard to explain given the industry's strong trading and upgrades to guidance.

The broker blames the perceived threats from interest rates, input pressures and shifting government policy, but believes these fears are now past their worst.

Based on this favourable outlook for 2022, Liberum’s note sees significant upside for shares across the sector. Its top picks are Persimmon and MJ Gleeson.

ITV predicts highest ad revenue in history

08:12 , Oscar Williams-Grut

ITV is on track for the highest advertising revenues in its 66-year history, the national broadcaster said today.

The broadcaster and production studio said advertising revenue was on track to rise by 24% by year end, which would take it above pre-pandemic levels and to an all-time high.

Advertising sales are up 30% so far this year, ITV said, helping revenue at its media and entertainment business climb 28% to £1.6 billion. Revenue at ITV Studios, which produces shows for the broadcaster and other channels, saw revenue rise 32% to £1.2 billion.

CEO Carolyn McCall said: “By any standards ITV has had an outstanding nine months. Revenue from each business over the nine months is up both on last year and on 2019.

Read more.

Tesla shares slide 12%

07:58 , Graeme Evans

Tesla shares have endured their worst session of the year after the electric car maker lost 12% of its value on Wall Street last night.

The slide is on top of Monday's 5% fall and comes after boss Elon Musk indicated he would abide by the result of a Twitter poll and sell a 10% chunk of his holdings worth around $21 billion.

Tesla's valuation is now back at $1 trillion, having gone through this threshold at the end of October after a 150% surge in the past year.

Amazon picks Westfield London for next store launch

07:58 , Joanna Bourke

Amazon is opening a second ‘4-star’ shop in the UK (Amazon)
Amazon is opening a second ‘4-star’ shop in the UK (Amazon)

Online retail giant Amazon has boosted its UK physical real estate presence, agreeing to open a shop at the Westfield centre in White City.

The firm’s new ‘4-star’ Westfield London branch, around 5,000 square feet, will sell a range of goods trending on Amazon’s website, covering categories such as books, games and toys.

Read more HERE.

M&S toasts higher profits, but not immune from supply chain pain

07:56 , Joanna Bourke

Marks & Spencer has cheered first-half sales and profits rising above pre-pandemic levels, but it cautioned on “significant” supply chain costs rises ahead.

However, assuming there is no further pandemic related disruption, the chain is forecasting profit before tax and adjusting items for the year will be ahead of expectations and in the region of £500 million.

Read the full story HERE.

Vodka sales spike, ale sales tumble at JD Wethespoon

07:50 , Simon English

SALES of cocktails, vodka and rum have jumped at JD Wetherspoon, while ale and stout sales have plummeted in the last three months.

Following a record annual loss reported last month, today the pub chain said sales in the quarter to November 7 were nearly 9% lower than the same period in 2019, pre-Covid.

The company puts the shift in the sort of drinks being consumed down to age – younger drinkers are back in pubs, older customers are still staying away.

Cocktail sales are up 45%, ale is down 30%.

read more here

Federal Reserve under pressure as US inflation spikes

07:43 , Graeme Evans

US inflation is set to reach its highest level since 1990 when figures for October are released by the Bureau of Labor Statistics later today.

Wall Street expects the consumer prices index for the month to have risen by as much as 5.9% over a year earlier, above the level seen in 2008 when the rate hit 5.6%.

Policymakers at the US Federal Reserve believe that the price pressures are short-term and that there's currently no need to think about putting up interest rates.

A strong inflation figure will fuel expectations that rates may have to rise next year, reversing the recent decline in US bond yields seen since the Federal Reserve's meeting last week.

It also emerged today that China's annual inflation rate accelerated sharply to 1.5%, which was slighly above the market consensus of 1.4% and the highest figure since September 2020.

The inflation uncertainty meant US markets broke a sequence of eight successive daily gains, with Tesla among the stocks most under pressure after falling by 12%.

The electric car maker's sell-off also reflected the fall-out from the result of Elon Musk's weekend Twitter poll on whether to offload 10% of his stake in the S&P 500-listed company.

The FTSE 100 index is forecast by CMC Markets to open 14 points lower at 7260.

Bitcoin has also fallen back overnight, with the cryptocurrency trading at $66,538 compared with the record of above $68,000 seen earlier this week.

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