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FTSE 100 Live: ‘Pressure on the Bank of England to raise rates’; Palantir job cuts; FTSE closes down 0.1%

 (Evening Standard)
(Evening Standard)

Forecast-busting public sector borrowing figures today set the tone for a downbeat session by the FTSE 100 index.

The latest lacklustre performance by London shares came amid more uncertainty due to the ongoing US debt ceiling negotiations.

On the corporate front, BT shares are in focus after telecoms billionaire Patrick Drahi raised his stake to 24.5%.

Take a look at the latest data as markets close. Click the tabs to go between the charts,

FTSE 100 Live Tuesday

  • Drahi lifts BT stake to 24.5%

  • Public borrowing higher than expected at £25.6bn

  • UK private sector growth slows in May

Ocado to fall out of FTSE 100

16:49 , Daniel O'Boyle

Grocery delivery firm Ocado is set to fall out of the FTSE 100 at the start of June, after a sharp fall in its share price in recent months.

The index’s parent company FTSE Russell warned that, based on current share prices, Ocado would no longer be one of London’s top listed companies, and is set to lose its place among blue-chips to Birmingham-based industrials firm IMI.

However, the offical date taken for the new list is 30 May, meaning Ocado could keep its place if it recovers.

FTSE 100 closes down 0.1%

16:39 , Daniel O'Boyle

The FTSE 100 closed down 0.1% at 7763, after falling late in the day.

The index had reached a high of 7799 just before US markets opened, only to fall late in the day.

Vodafone was the biggest riser of the day, while RS Group was the biggest faller with a 7.1% drop.

Interest rates ‘to stay higher for longer in order to get grip on inflation’

16:21 , Daniel O'Boyle

Interest rates in Britain will likely have to rise further from 4.5 per cent and “remain high for longer” to get a firm grip on inflation, leading economists have warned.

The International Monetary Fund also cautioned against “premature celebrations” that sky-high inflation, which has risen into double figures, has been conquered and said it could “re-emerge or plateau at an elevated rate”.

However, it forecast that the UK would avoid a recession and see economic growth this year, of a miserly 0.4 per cent but better than the 0.3 per cent contraction predicted in April.

Read more here

Climate change protesters try to storm the stage at tense Shell AGM

15:55 , Daniel O'Boyle

A shareholder rebellion against Shell’s board has secured a fifth of votes at a shareholder meeting where climate change protesters tried to storm the stage.

Suit-clad members of the security team in London linked hands to shield chairman Sir Andrew Mackenzie and chief executive Wael Sawan as a handful of protesters attempted to run onto the stage.

Campaign group Fossil Free London later claimed responsibility for the rush, while several other groups also sang songs and chanted slogans against the producer of oil and gas.

Read more here

Cranswick hails Philippine butcher hires as key in revenue growth as Brexit hits labour supply

15:43 , Daniel O'Boyle

Supermarket sausage marker Cranswick said the recruitment of 400 butchers from the Philippines, after it struggled to find skilled workers closer to home, helped it continue to grow its profits despite a year of disruption.

The East Yorkshire-based firm, which has 22 UK facilities employing 13,700 people, said it had been a third year of “unprecedented disruption” but that adjusted profits still rose by 2.3% to £140.1 million.

While the FTSE 250 firm continues to press the case for the UK farming and the wider food producer sector, it said the challenge of finding enough high quality skilled butchers had meant recruiting from the Philippines.

Read more here

Interest rate hikes trigger 10% writedown of Helical’s London office portfolio

15:26 , Daniel O'Boyle

The value of London property developerHelical’s portfolio declined by 10.1% to £839.5 million, but CEO Gerald Kaye pointed out that still meant the company outperformed the average for the Central London market.

The developer, with properties including the JJ Mack Building in Farringdon, made a loss of £64.5 million, due to the writedown of its portfolio. But Kaye pointed out that the decline in value was lower than that experienced by many central London rivals.

Read more here

US shares slightly higher

14:51 , Daniel O'Boyle

Shjares in US companies are slightly higher so far today as investors continue to look for signs of progress towards a deal on the country’s debt ceiling.

Here’s a look at how markets have performed during the first hour of trading on Wall Street.

Match Group and Pfizer have been among the biggest gainers.

Shareholders narrowly vote to approve Wagamama owner The Restaurant Group CEO’s big payout after backlash

14:25 , Simon Hunt

Shareholders have narrowly voted to approve the remuneration report of Wagamama owner The Restaurant Group amid fury over a huge payout to its senior management despite widening losses.

A vote on the report was passed by a margin of 55 to 45%, its AGM results show today.

CEO Andy Hornby, who has been at the helm of TRG since 2019, is set to receive a share award worth over £850k on top of his salary after a year in which the Wagamama and Frankie and Benny’s owner posted an £86.8 million loss for 2022, more than double the £35.2 million loss the year before.

According to the company’s annual report, Hornby is set to be awarded shares worth as much as 125% of his salary per the terms of the company’s so-called ‘Restricted Share Plan.’ He stands to be awarded a maximum of £2.7 million in 2023 according to the firm’s annual report, assuming the share price appreciates.

The bar for receiving the full award would appear to be significantly lower than that for share awards for CEOs of other major listed companies: Hornby only needs to avoid allegations of gross misconduct, avoid misstating TRG’s accounts and prevent it going bust to avoid triggering clawback conditions on the payout.

read more here

Wagamama are trying to improve the environmental impact of their delivery business (PA)
Wagamama are trying to improve the environmental impact of their delivery business (PA)

Market snapshot: lunchtime update

13:13 , Simon Hunt

Ahead of the opening of trading on Wall Street, here’a a look at how markets are performing in the UK at lunchtime.

Tech giant Palantir to cut scores of jobs in London

11:58 , Simon Hunt

Tech giant Palantir is planning to axe scores of jobs from its London office, the Standard can reveal.

The Colorado-based data analytics business co-founded by billionaire Peter Thiel is consulting on proposals to slash as many as 75 jobs from the capital. That would represent a cut of just over 12% of its UK workforce, based on employee numbers disclosed in its most recent accounts filed with Companies House.

Last year, the firm was reportedly exploring expanding to open a second UK base in the north of England, possibly near the NHS Digital headquarters in Leeds. But those plans are now under review and a final decision has yet to be taken.

Palantir declined to comment. It follows an earlier round of cuts announced by the business in February, in which it laid off 2% of its global workforce. The firm previously said in a statement: “We believe our company is at an inflection point and to continue to evolve, we are making the tough choice of reducing teams in several areas. These are incredibly painful decisions but the right ones for the company’s future.”

read more here

‘Pressure on the Bank of England to raise rates’

11:23 , Daniel O'Boyle

Ashley Webb, UK economist at Capital Economics, saidthe continued strength of the services economy could be driving stubborn inflation, whcih may force the Bank of England to raise rates further.

“May’s PMIs suggest that economic growth is being supported by the services sector while manufacturing activity continues to contract,” Webb said.

“The strength in services activity may be supporting persistent domestic inflationary pressures, which will increase the pressure on the Bank of England to raise interest rates above 4.50% at the next policy meeting in June.”

Economists at Capital had previously expected interest rates would peak at 4.5%, but stay there for a long period of time.

London fintech Paydock secures £25 million funding round

11:08 , Simon Hunt

Payments orchestration business Paydock has become the latest London fintech to attract an eight-figure funding round, the Standard can reveal.

The Southwark-based business, which manages payment providers on behalf of clients, has secured a £25 million series A round led by venture capital firm Silverstripe. Paydock declined to confirm the company’s new valuation after the round.

The company was launched in Australia in 2015 before moving to London in 2018. Lincolne said it had become more difficult to secure funding amid a fall in fintech valuations but that investors are continuing to back tech firms with a strong business case.

read more here

Paydock founder Rob Lincolne (Paydock)
Paydock founder Rob Lincolne (Paydock)

Pound falls below $1.24

10:53 , Daniel O'Boyle

The pound has fallen to its lowest level in more than a month, following the latest UK PMI data.

A pound buys $1.2388, which is its lowest value since early April. It reached $1.26 earlier this month.

That comes as the S&P Global CIPS PMI found that strong wage inflation meant service providers experienced the fastest rise in their cost burdens for three months.

One pound also buys €1.1486.

UK will avoid recession in 2023 – IMF

10:24 , Daniel O'Boyle

The International Monetary Fund (IMF) said it is not expecting the UK to enter a recession this year.

In an update to recent forecasts, it said: “Buoyed by resilient demand in the context of declining energy prices, the UK economy is expected to avoid a recession and maintain positive growth in 2023.”

But it said the outlook for growth remains “subdued”, forecasting growth of 0.4% this year.

Read more here

Property firms higher in FTSE 100, Cranswick leads FTSE 250

10:20 , Graeme Evans

Shares in supermarket sausages firm Cranswick today led the FTSE 250 index after it racked up a 33rd year of dividend growth.

The East Yorkshire-based firm, which has 22 UK facilities employing 13,700 people, said it had been a third year of “unprecedented disruption” but that adjusted profits still rose by 2.3% to £140.1 million.

While the FTSE 250 firm continues to press the case for the UK farming and the wider food producer sector, it said the challenge of finding enough high quality skilled butchers had meant recruiting from the Philippines.

Chief executive Adam Couch said the move came at a significant cost but that it had safeguarded service levels when some in the sector had to cut back production due to the ongoing labour shortages.

Shares rose 5% or 140p to 3280p as Couch unveiled a 5% increase in the full-year dividend award to 79.4p a share.

Cranswick shares posted the best performance of the FTSE 250 index, with other mid-cap risers including the fast fashion chain ASOS with a rebound of 4% or 17.8p to 461.3p.

The FTSE 250 index stood 0.3% or 58.70 points higher at 19,332.40, representing a session of outperformance after London’s blue-chip index was held back by ongoing uncertainty over US debt ceiling negotiations.

The top flight added 5.39 points to 7776.38, with British Land and Land Securities in demand following share price gains of 2%.

The biggest fall came from components supplier RS Group, which retreated 4% or 36.2p to 816.6p after it published in-line annual results but said trading in the first first seven weeks of the financial year pointed to slower industrial growth.

In the FTSE All-Share, military headgear supplier Avon Protection fell 100p to 870p as its interim results included cautious guidance for its respiratory division.

ITV invests in pet tracker firm PitPat

10:01 , Daniel O'Boyle

ITV will invest £3 million in pet tracker firm PitPat, as part of its “media-for-equity” investment fund AdVentures.

Ads for PitPat — which makes GPS trackers and health monitors for dogs — will appear on ITV and the ITVX streaming service, in the hope that the broadcast giant will then see financial returns from the new exposure.

ITV will invest £3 million in pet tracker firm PitPat, as part of its “media-for-equity” investment fund AdVentures (Andrew Milligan/PA) (PA Archive)
ITV will invest £3 million in pet tracker firm PitPat, as part of its “media-for-equity” investment fund AdVentures (Andrew Milligan/PA) (PA Archive)

Sheena Amin, director of AdVentures, said: “We know that ITV viewers index highly as pet owners and I’m confident that we can help drive category awareness for pet GPS trackers and put PitPat on the map at the same time.”

ITV will subscribe for £3 million in shares and will have the option to buy another £1 million worth.

PitPat employs 33 and made a £1.7 million loss last year.

City Comment

09:45 , Simon English

In theory, the government is keen on balancing the books, spending no more to run the country than it receives in tax. That sounds prudent – people get it.

In reality, it is a million miles off that goal to the extent that one wonders if it is even realistic.

Today’s red ink flows like this: Borrowing hit £25.6 billion in April, nearly £12 billion more than for the same month last year.

That was mostly the costs of benefits and of helping families deal with energy related inflation. The government had to spend this money. It could have jiggled things around a bit differently, but the amounts would have been roughly the same.

Interest payable on the national debt was £9.8 billion in April alone.

There’s a long way to get from there to a supposedly balanced budget and some pre-election sweeteners to jaded voters.

The Chancellor today insists that is still his plan, however reality looks.

Maybe it is time to change the debate here and accept that government debt is only going one way – up.

A more imaginative opposition could embrace the debt and admit it isn’t likely to fall any time soon even if it gets elected.

It could say that the interest payments on the debt mostly come back to us one way or the other. And that the point of the spending is to improve our children’s inheritance, rather than burden them with liabilities.

The government runs a deficit to create a surplus elsewhere – with us, it could add.

Then we could have an honest conversation at least about why we run deficits, which we nearly always do, and why they are sometimes cheaper than the alternative, which is to let everything collapse.

If you think debts are expensive, try an economic depression.

UK private sector growth slows in May

09:36 , Daniel O'Boyle

The UK private sector grew again in May, but the rate of growth was down, according to a closely watched indicator.

The S&P Global / CIPS Flash UK PMI came in at 53.9, down from April’s 54.9 and below the expected 54.6. But with any figure above 50 representing growth, the reading should continue  to boost hopes that the UK avoids recession.

The figures would suggest GDP growth of around 0.4% in the second quarter of the year.

“However, this growth spurt is driving renewed inflationary pressures, as service providers struggle to meet demand and hence not only offer higher wages to attract staff but also find themselves able to charge more for their services,” Chris Williamson, chief business economist at S&P Global Market Intelligence, said.

SSP does deal to bring Brewdog to London airports

08:58 , Daniel O'Boyle

Upper Crust owner SSP will bring Brewdog’s pubs to railway stations and airports across the UK, starting with Gatwick this year, through a new tie-up.

SSP said the Gatwick bar will include Brewdog’s “signature design elements” like Zoom pods and a game space, alongside a menu “tailored for the airport location”.

Kari Daniels, SSP UK & Ireland CEO, said: “BrewDog is a globally renowned brand with an incredible back-story and huge potential to do well in the travel space.”

 (Brewdog/SSP)
(Brewdog/SSP)

Today SSP also revealed profit for the six months to 31 March grew sixfold to £90.5 million. It said growth was driven by domestic and leisure travel at airports and train stations, while business travel was slower to recover.

SSP now expects full-year profits to be close to £280 million, the upper end of its previous guidance.

Snapshot as market opens

08:22 , Simon Hunt

A few minutes after the trading session begins in London, here’s a snapshot of your key markets data.

Click through the buttons below to look through the charts.

Utility stocks lead FTSE 100 lower, BT shares up 2%

08:20 , Graeme Evans

London’s blue-chip shares have made a worse-than-expected start, with the FTSE 100 index down 0.2% or 15.95 points to 7755.04.

The latest lacklustre session included modest falls for shares in Anglo American and HSBC, while utility stocks including National Grid, Severn Trent and United Utilities were out of favour.

However, BT shares lifted 2% or 2.65p to 150.5p after Patrick Drahi disclosed an increased stake of 24.5% in the telecoms giant.

The FTSE 250 index eased 18.52 points to 19,254.82, although supermarket meat supplier Cranswick stood 3% higher and the railway station caterer SSP lifted 5% on the back of their respective results.

Military helmets supplier Avon Protection fell 9% in the FTSE All-Share, down 90p to 880p after its interim results included cautious guidance on its respiratory division over the rest of the year.

Helical hit by 10% writedown of portfolio

07:54 , Daniel O'Boyle

The value of London property developer Helical’s portfolio declined by 10.1% to £839.5 million, but CEO Gerald Kaye pointed out that still meant the company outperformed the average for the Central London market.

The developer, with properties including the JJ Mack Building in Farringdon, made a loss of £64.5 million, due to the writedown of its portfolio.

“But underlying that we haven’t had a bad year,” Kaye said. “We made sales, we’ve done some good lettings, we’re seeing rental growth for the best-in-class assets.

“And the thing we’re most excited about is our development pipeline.”

Analysts at Peel Hunt said: “A strong pipeline of opportunity and an implied yield of 7.9% remains highly attractive.”

 (Helical)
(Helical)

Higher borrowing may not deter Hunt from cutting taxes

07:30 , Daniel O'Boyle

Ruth Gregory, deputy chief UK economist at Capital Economics, says she doesn’t think today’s upblic borrowing figures will mean the Chancellor will have to tighten fiscal policy.

She pointed to the fact that, after last year’s borrowing was lower than expected, borrowing over the longer run is still below the OBR’s forecasts.

“April’s public finances figures got the new fiscal year off to a shaky start,” she said. “But we doubt this will prevent the Chancellor from embarking on a fiscal splurge ahead of the next election, due to take place before January 2025.

“We wouldn’t be at all surprised to see a pre-election giveaway in the Autumn Statement on top of the £21.9bn (0.8% of GDP) giveaway for 2023/24 already announced in the Budget in March.”

Drahi buys more BT shares

07:25 , Graeme Evans

French billionaire Patrick Drahi’s stake in BT now stands at 24.5% after his Altice telecoms business disclosed the purchase of another 650 million shares this morning.

At the same time, Altice has reiterated that it does not intend to make a takeover offer for the FTSE 100-listed business.

The latest investment by Drahi comes after BT’s annual results last Thursday sent shares as low as 135p, although they’ve recovered to 146.6p at last night’s close.

Debt ceiling focus holds back markets

07:11 , Graeme Evans

The caution of Wall Street markets looks set to carry over to Europe this morning, with the FTSE 100 index set for a broadly flat start.

The muted global performance comes as traders opt to wait on the sidelines ahead of developments in US debt ceiling negotiations.

Monday’s session saw the Dow Jones Industrial Average fall 0.4%, with the S&P 500 index close to its opening mark. However, the momentum for US tech stocks continued as the Nasdaq Composite added another 0.5%.

The FTSE 100 improved 0.2% yesterday and is forecast by CMC Markets to open four points higher at 7775 today. The main interest of the session is likely to be on flash PMI figures from the UK and major economies across Europe.

Brent crude futures today stood at $76.13 a barrel, with the pound trading at $1.242.

Public borrowing higher than expected at £25.6bn

07:07 , Daniel O'Boyle

Public sector net borrowing in April was £25.6 billion, well ahead of the expected £19.1 billion.

The energy support scheme continued to be a major factor in the high borrowing figure, alongside higher benefit payments and interest on debt.

After borrowing for the full 2022-23 year came in lower than expected, prompting hope of tax cuts in the Autumn, the higher-than-predicted figure may make Jeremy Hunt more cautious.

The figure was the second-highest for April since records began in 1993.

Public sector net debt is now £2,536.9 billion.

Recap: Yesterday’s top stories

06:46 , Simon Hunt

Good morning. Here’s a summary of our top stories from yesterday.

  1. Social media firm Meta was hit with a record £1 billion fine by EU regulators over data transfers of European users to the US.

  2. A surge in demand for flights has helped bring back soaring profits for Ryanair amd a huge payout for its CEO.

  3. The CFO of London fintech Wise is set to quit, just days after its CEO said he would be taking several months away from work.

  4. Research has found the average UK household has lost £5,455 to inflation over past two years.