A profit warning by B&Q owner Kingfisher and robust trading figures from Ocado provided the main interest in the FTSE 100 today.
Traders are also watching oil prices amid fears that a 10-month high for Brent Crude will cause interest rates to stay high for longer.
Other companies reporting today include Hargreaves Lansdown, TUI, Trustpilot, Moonpig and Naked Wines.
FTSE 100 Live Tuesday
B&Q owner Kingfisher cuts guidance
Brent Crude tops $95 a barrel
TUI upbeat after strong summer
FTSE closes up seven points
16:42 , Simon Hunt
The FTSE 100 ended the day around where it started, gaining only seven points to 7,660.20.
The index was in positive territory for almost the entire day, but barely even got past the 7680 mark as traders remained cautious ahead of a pivotal inflation reading tomorrow.
Hargreaves Lansdown was the top riser after strong financial results. On the other hand, Kingfisher shares lost 11% following a profit warning.
City Voices: Bank of England should speed up interest rate cuts to avoid further pain
On Thursday the Monetary Policy Committee (MPC) of the Bank of England will announce whether or not it will increase Bank Rate for the fifteenth time in a row. The MPC is widely expected to follow the example of the European Central Bank and raise interest rates once more and the consensus among the markets and economists is that this will be a final rise taking them to 5.5% and where they will remain for several months at least.
Such a move would be wrong. The MPC should not increase interest rates on Thursday and should consider lowering them more quickly.
While the Bank of England was right to begin the cycle of tightening monetary policy, it did this far too late and have raised rates to a damaging height. The Bank took its eye of the ball during the pandemic and its immediate aftermath and was clearly prepared to tolerate inflation being slightly higher than target.
More delays to Revolut’s accounts
16:00 , Simon Hunt
London fintech Revolut has sought a three-month extension to the filing of its 2022 accounts, marking the second time in as many years its annual report has been delayed.
The firm’s 2021 accounts, which were eventually published in March, showed auditor BDO was “unable to satisfy” itself over the completeness of all of Revolut’s revenue information.
Revolut is still waiting to hear back on whether it will be granted a UK banking licence after making an application in early 2021.
Nasdaq opens lower
15:53 , Simon Hunt
An hour into the day’s trading session on Wall Street, the Nasdaq is down just under 1%.
Here’s a look at key US markets data:
Media Watch: Fawning over Fayed? We’re all as guilty as each other
15:14 , Daniel O'Boyle
“In his office in Harrods, the late Mohamed Fayed would sit and stare at a photo of Princess Diana, framed in pride of place on the wall,” Chris Blackhurst writes. “It was the one of her sitting alone on the diving board of his luxury yacht. “Look at her, Baldy,” he would say. ‘They killed her, that Nazi Philip, he killed her.’
“I can’t begin to count the hours I spent poring over the death of Diana and Fayed’s son, Dodi, in the Paris car crash in August 1997.
“I knew him because I had covered his career and various scrapes at length as a writer and for different newspapers and magazines. After the tragedy, every so often, I would receive a summons to Harrods to hear a new theory propounded or the phone would go and it would be a Fayed minion sharing the latest ‘compelling’ detail.”
City Voices: Is the Bank of England’s gilts offload a ‘selling gold at the bottom’ moment?
14:20 , Daniel O'Boyle
Move over Quantitative Easing. Quantitative Tightening is the order of the day. Money printing is in reverse and balance sheet reduction — selling the government bonds bought during the QE era — is now a focus of the Bank of England.
Other central banks are treading gently. Selling bonds on this scale has never been done before. Nor has it been tried when markets have had to digest the ramifications of both high inflation and substantial rate hikes. Prices for bonds are today much lower (and yields higher) than when the central banks bought the same securities previously. So understandably, most central banks have been proceeding slowly.
But not the Bank of England.
Elon Musk suggests all X users could be asked to pay to use platform
13:28 , Daniel O'Boyle
Elon Musk has suggested that all users of social media platform X could be required to pay to use the service in an effort to stop bots on the site.
Speaking during a livestreamed conversation on artificial intelligence (AI) with Israeli Prime Minister Benjamin Netanyahu on Monday, the billionaire said the company is “moving towards a small monthly payment for use of the X system”.
Mr Musk said it is the “only way” to combat “vast armies of bots” by pricing out those who want to create large networks of accounts to spread content on the platform.
City Comment: The Bank should pause on rates
12:46 , Daniel O'Boyle
Inflation figures out tomorrow might be a bit of a shocker, on the face of it.
Assuming the City economists have it right (you can make your own joke), the August inflation number will be back above seven per cent — 7.2%, perhaps.
That would be up from 6.8% in July and the first time inflation has risen since February.
That’s quite a dent in the narrative from Rishi Sunak that inflation is, if not licked, then firmly heading in the right direction.
12:37 , Simon Hunt
Mid-way through the day’s trading session in London, the FTSE 100 is broadly flat but brent crude is once again flirting with $95 a barrel.
Here’s a look at your key market data:
City watchdog claims data review shows no banks have closed accounts ‘primarily’ due to political views
12:19 , Daniel O'Boyle
City watchdog the FCA has claimed that no banks closed anyone’s accounts “primarily because of a customer’s political views” in the year to June 2023, according to a data-finding investigation launched after the controversy over closure of Nigel Farage’s account with Coutts.
The Financial Conduct Authority (FCA) launched a data exercise around question of politically influenced debanking, after the former UKIP leader lost his account with NatWest-owned Coutts.
A dossier released by Farage following a subject access data request showed that Coutts’ reputational risk committee had compiled information about his political positions before closing the account.
OECD: UK flatlining economy will grow slower and suffer higher inflation than eurozone
11:13 , Daniel O'Boyle
Britain’s flatlining economy will grow more slowly and suffer higher inflation than the Eurozone this year, leading economists warned on Tuesday.
The Organisation for Economic Co-operation and Development upgraded its GDP growth forecast for 2023 from zero in June to 0.3 per cent.
But this was still behind the 0.6 per cent predicted rise for the eurozone, where there were stark divisions with Germany’s economy set to shrink by 0.2 per cent, France to grow by one per cent, and Spain by 2.3 per cent.
Kingfisher shares hammered after B&Q owner warns on profits
10:56 , Daniel O'Boyle
Shares in the owner of B&Q and Screwfix slumped today after a profit warning followed a disappointing showing from its Polish and French businesses.
Kingfisher cut its full-year profit forecast to £590 million, down from £634 million. It reported a drop in first-half profit before tax of a third, to £317 million.
It came with what the FTSE 100 company called “weaker consumer sentiment” and a “challenging ... macroeconomic backdrop” in Poland, where high inflation is high and interest rates have risen sharply.
Oil majors support FTSE 100, Hargreaves Lansdown surrenders early gains
10:15 , Graeme Evans
Brent Crude’s ascent to over $95 a barrel today did little to ease City fears that global interest rates are staying high for longer.
Declining output by US shale producers triggered the latest hike in the oil benchmark, which has risen for three weeks in a row to a 10-month high.
The inflationary pressure is likely to mean less room for rate cuts by major central banks in the coming year, a point that may well be underlined by the US Federal Reserve after its policy meeting tomorrow.
The uncertainty led to a subdued session for London shares, although gains of 1% for oil giants BP and Shell helped the FTSE 100 index 17.55 points higher at 7.670.49.
Investment platform Hargreaves Lansdown was among other heavily traded stocks after its full-year underlying profit of £439 million came in 5% ahead of City forecasts.
New boss Dan Olley described the performance as “robust” amid the net addition of 67,000 clients and 26% rise in revenues to £735.1 million. Shares initially bounced 5% but gave up the gains to settle 4p lower at 761p.
The FTSE 250 index recovered from yesterday’s slump by adding 80.74 points to 18,530.01, with technology and science recruitment firm SThree among the best performers after a reassuring trading update. Shares rose 16.5p to 375.5p.
On AIM, Quiz lost a third of its value as the fashion retailer warned that sales will be up to 7% lower than current market expectations. The stock fell 3.3p to 5.5p.
Food hall operator Market Halls eyes expansion as sales more than double
09:56 , Daniel O'Boyle
London food hall operator Market Halls saw sales more than double to £22 million, as it plans to expand outside of London.
The business, which operates food halls at Victoria, Canary Wharf and Oxford Street, served more than three million customers in the year to 31 July, thanks to a return of both office-workers and tourists.
Since the start of its new financial year, the business has seen consecutive record trading weeks. At Victoria, the only venue that was open before 2020, sales are ahead of pre-pandemic levels.
CEO Andy Lewis-Pratt said: “To have seen the popularity of our venues surge despite the tough economic environment is testament to the strength of the Market Halls proposition.”
With backing from private equity firm Gees Court Partners, the business aims to open two-to-three new sites a year, targeting major cities outside of London. It aims to both develop new sites and acquire existing food halls.
09:12 , Daniel O'Boyle
Package holidays giant Tui said it would have beaten its profit expectations over the summer if not for the wildfires in Rhodes.
The German firm received 5% more bookings this summer than last, and is at 96% of pre-pandemic levels, with UK bookings already ahead of 2019.
But the wildfires in Rhodes, a popular destination for Tui holidays, hit sales. Even with this impact, Tui expects to hit its targets for the year ending 30 September with profits “significantly” ahead of last year.
CEO Sebastian Emel said: “had it not been for the various events during the last few months which were outside of our control, not least the wildfires on Rhodes, we would have performed ahead of expectations”.
Other travel firms, including low-cost airlines Ryanair and Easyjet, have reported huge sales this year as holidays appear to be the one luxury unaffected by the cost-of-living crisis.
Tui shares climbed by 6.2% to 496p.
Trustpilot shares rise 11% on earnings forecast lift
08:59 , Simon Hunt
Trustpilot shares rose as much as 11% after markets opened this morning as investors cheered the review site’s higher earnings guidance.
The firm upgraded its earnings guidance to beyond the top of the range of market expectations after it saw a surge in bookings.
Revenue increased by 18% to $84.6 million in the first six months of the year, while bookings rose 16% overall and as much as 21% in Europe.
Founder Peter Holten Mühlmann told the Standard: “We’ve had a range of initiatives to encourage more people to leave reviews.
“The more consumers use Trustpilot, the more businesses want to be on the platform. We’re seeing the effect of network effects come through in the market.”
Results-day slump for Kingfisher, FTSE 100 slightly higher
08:23 , Graeme Evans
Shares in B&Q owner Kingfisher and investment platform Hargreaves Lansdown have moved sharply in response to their respective results.
In a session when the FTSE 100 index is slightly higher at 7661, Kingfisher is down 6% or 13p to 222.6p and Hargreaves has rallied 5% or 37.8p to 802.8p on the back of better-than-expected full-year figures.
In the FTSE 250 index, British Land shares are 2% or 4.7p higher at 312.9p after the property firm upgraded guidance for its portfolio of retail parks.
Among smaller companies, the AIM-listed shares of windows specialist Safestyle have tumbled 3.4p to 4.9p after it downgraded full-year results guidance. Wickes shares also dropped 5.4p to 138p in reaction to the profit warning by Kingfisher.
Ocado shares rise on revenue boost
08:16 , Simon Hunt
Ocado shares rose as much as 4.9% in the opening minutes of trade after investors cheered a rise in revenue and slimmer costs.
Sales from the firm’s retail arm, which operates as a joint venture with M&S, rose by 7.2% to £570 million, as the company said it had moved from a negative to a narrowly positive EBITDA figure.
The company today opened its shiny new Luton distribution centre, set to be its most efficient yet as it sought to bear down on the costs of its operations.
But average basket size of customer orders has fallen more than 8% since last year in signs shoppers continue to cut back on shopping lists amid higher prices.
Naked Wines warns on going concern uncertainties
07:39 , Daniel O'Boyle
Naked Wines swung to a £15 million loss and warned that it could be at risk of going bust if a “combination” of factors all hit cash flow over the next year.
The online wine retailer has cut its non-customer service workforce by 12%, but said it still needed to make more cost savings after underperforming this year. The business sees revenue declining by 8-12% this year, worse than previously expected.
Naked Wines said it should be able to continue as a going concern even in its “downside” scenario of a 17% slide in sales. However, it said that this would rely on “trading performance which is currently volatile”, as well as the cooperation of suppliers and access to more borrowing.
“As a result, there remains a risk that a combination of these assumptions could result in a reduction in actual cash flows which would result in the business being unable to meet its covenant commitments,” it said.
Kingfisher warns on profits for 2023 as half-year earnings hit by Poland and France
07:30 , Michael Hunter
The owner of the B&Q and Screwfix home improvement and builders’ merchants chains issued a profit warning today, after a disappointing showing in its French and Polish business.
Kingfisher said it now expects full-year profit of £590 million, down from £634 million. It reported a drop in first-half profit before tax of a third, to £317 million.
The decline came with what it called “weaker consumer sentiment” and a “challenging ... macroeconomic backdrop” in Poland> France’s Brico Dépôt had a “weaker performance ... following unsuccessful reallocation of marketing to digital.”
The company, which has over 300 B&Q stores in the UK and Ireland and around 840 Screwfix branches, said its core business in the UK continued to have “positive momentum” and “good growth”. It said Screwfix gained “significant market share.”
Sales of big ticket items was healthy and it said it expected volume for higher-cost purchases to improve in the second half.
Trustpilot upgrades earnings guidance on surge in bookings
07:22 , Simon Hunt
Review website Trustpilot today upgraded its earnings guidance to beyond the top of the range of market expectations after it saw a surge in bookings.
Revenue increased by 18% to $84.6 million in the first six months of the year, while bookings rose 16% overall and as much as 21% in Europe.
The firm posted a loss of $2.5 million, down from $9.2 million the previous year.
Adrian Blair, the firm’s new CEO who joined last week, said: “This is an exciting time to join Trustpilot and I am looking forward to working with the team as we scale the business further and continue to deliver sustainable, profitable growth alongside product innovation.”
Oil at $95 a barrel, FTSE 100 seen flat
07:17 , Graeme Evans
Jitters ahead of tomorrow’s Federal Reserve rates decision meant a lacklustre start to the week for Wall Street shares yesterday, with all three major US benchmarks barely changed at the closing bell.
Big movers included Tesla, which dropped more than 3.3% after Goldman Sachs lowered its profit forecasts for this year and next, and debutant Arm Holdings with a decline of 4%.
The FTSE 100 index, which fell 0.7% to 7652 on Monday, is forecast by IG Index to open broadly unchanged at the start of today’s session.
Oil prices, meanwhile, stood at just below $95 a barrel this morning as traders continue to focus on the supply outlook following Saudi Arabia’s recent voluntary production cut.
Recap: Yesterday’s top stories
Monday 18 September 2023 22:06 , Simon Hunt
Good morning. Here’s a summary of our top headlines from yesterday:
Ad giant Sir Martin Sorrell downbeat due to “challenging conditions” and “fears of recession” among big ad clients at S4 Capital. Cuts staff by 5%
Car dealership firm Pendragon will sell its UK motor business, including brands such as CarStore and Stratsone, as it focusses on rolling out its dealership management technology across the Atlantic
Savers pour money into pensions giant Phoenix’s funds, as new business net inflows surge 72%
Venture capital firm Super Seed Capital makes triple-digit rate of return on sale of large language model investment in sign of rocketing AI valuations.
CMA highlights consumer harms posed by fresh AI tools in new report.