FTSE 100 Live: Pound hits six-week high of $1.16; US tech stocks sink

The pound has recovered to a six-week high of $1.16 in the days following the arrival of Rishi Sunak in Downing Street.

Big Tech shares were shaken last night after Google and YouTube parent company Alphabet posted weaker-than-expected revenues and earnings figures.

Slower advertising spending meant Alphabet shares tumbled 7% in after-hours trading, while Microsoft also fell after its latest guidance.

The corporate earnings season continues today, with figures this morning from Barclays revealing a 6% rise in third quarter profits to just below £2 billion.

FTSE 100 Live Wednesday

• Barclays reports £2bn profit as interest rates rise

• Pound strengthens on slower US rates outlook

• Alphabet shares under pressure after weak update

07:39 , Simon Hunt

FTSE 100 closes up 43 points to 7,056 : FTSE evening wrap

Wednesday 26 October 2022 17:09 , Simon Hunt

The FTSE 100 index closed up 43 points to 7,056 on the day Rishi Sunak made his debut at PMQs. The gains were led by healthcare and basic materials stocks, up 1.9% and 2.7% respectively. Utilities stocks fell 0.4%, while consumer staples fell 0.9%.

Outside the FTSE 100, the pound reclaimed a six-week high of $1.16, while Made.com plummeted to a market cap of just £2 million after it said it had paused customer orders after failing to find a rescue buyer. Last year, the firm’s market cap was as much as £800 million.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “In the UK political kitchen, the cast of the latest series of the Great British Reshuffle has been assembled, ready to start cooking up their latest policies. Jeremy Hunt, the continuity candidate at the Treasury, is desperate for some dough to rise but recognises the risks of upsetting the bond market judges by not crossing out enough on his shopping list. Spending cuts are expected to be high on his page of ingredients for a more stable financial environment but that won’t help the head chef, Prime Minister Rishi Sunak, in the popularity stakes.

“The heat in the kitchen could rise again, as daunting problems are scrawled large on the board, not least the looming recession and smouldering issues such as acute labour shortages and the struggles with Europe. Recipes for growth will be hard to follow without the workers to propel productivity or a reduction of trade red tape. But with the immigration and Brexit hard-liner, Suella Braverman, back in her seat at the Home Office, there are unlikely to be any quick solutions plated up.”

Pound reclaims $1.16 to reach six-week high

Wednesday 26 October 2022 16:02 , Simon Hunt

The pound has reclaimed $1.16 to reach a six-week high after plunging to historic lows following the announcement of the disastrous mini-Budget in September, as markets were calmed by the arrival of Rishi Sunak in Downing Street.

Matthew Ryan, Head of Market Strategy at global financial services firm Ebury, said: “At 42 years old, Sunak is one of the youngest Prime Ministers to ever set foot in number 10, though markets still see him as a fairly steady pair of hands, particularly when it comes to stabilising the UK economy.

“Sunak’s leadership credentials are yet to really be tested, but investors seem to be of the view that his largely encouraging stint as chancellor should stand him in good stead. This has partly helped lift the pound back.”

Nasdaq tumbles as tech earnings stoke recession fears

Wednesday 26 October 2022 14:51 , Simon Hunt

The Nasdaq fell more than 2% in the opening minutes of trading in New York after disappointing earnings from Google and Microsoft stoked fears of a global slowdown in growth.

Google’s shares fell 7.5% after earnings figures last night showed a severe fall off at its core search ad business, something likely to hit rivals before long.Microsoft shares fell 7%.

The S&P 500 index fell 0.9%, while the Dow fell 0.3%.

US goods trading deficit widens

Wednesday 26 October 2022 13:55 , Simon Hunt

The US goods trade deficit widened in September as exports fell and imports rose.

The deficit went up by 5.7% to$92.2 billion, according to the US Commerce Department, led by a $2.8 billion drop in exports.

Pound at $1.1577

Wednesday 26 October 2022 12:41 , Simon Hunt

The pound went up slightly to $1.1577 as Rishi Sunak completed his first outing at PMQs. Sterling is up around 1% against the dollar since yesterday, and has also made gains against the euro.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Early rewards have come with the sharp rise in the pound, back up to six-week highs earlier today, but sterling was also given a leg-up by a slightly weaker dollar, amid expectations that the Fed won’t go so hard and fast with rate rises with given the record slowdown in house prices.

“Investors are mindful that it was the unnecessary rush to announce big tax cuts which caused such tumultuous times for the Truss administration and what they crave now is caution and stability. The premium slammed on UK assets by reckless policies of his predecessor appears to be slowly lifting, but hefty challenges for team Sunak remain, as the economy heads into recession and the productivity puzzle remains as cryptic as ever to solve.’’

Starmer grills Sunak over levelling up funding

Wednesday 26 October 2022 12:27 , Simon Hunt

Rishi Sunak is asked about a recording which surfaced during his first leadership bid in which he appeared to talk of funding being taken from deprived areas and given to more affluent ones.

He responds by saying that he will be a prime minister for the whole country and that he is “honest” about the challenges facing the country.

He said: “He mentioned the last few weeks. I am the first to admit that mistakes were made and that’s the reason I’m standing here.

“But that’s the difference between him and me. This summer, I was honest, I was talking about the difficulties we were facing. But when he ran for leader, he promised his party he would borrow billions and billions of pounds.

“I told the truth for the good of the country, he told his party what it wanted to hear.”

Sunak: I will focus on energy security

Wednesday 26 October 2022 12:08 , Simon Hunt

Responding to his first question as PM, Mr Sunak did not repeat a vow to ban on-shore wind farms, saying that he would focus on long-term energy supply, including renewable energy, and nuclear power.

Rishi Sunak leaves No10 ahead of PMQs

Wednesday 26 October 2022 11:47 , Simon Hunt

Rishi Sunak has left 10 Downing Street following his first Cabinet meeting as Prime Minister, ahead of Prime Minister’s Questions.

Mr Sunak walked out of the front door and did not respond to calls from reporters before entering a waiting Range Rover.

The Prime Minister then left Downing Street with a police escort.

Jeremy Hunt delays Oct 31 fiscal statement

Wednesday 26 October 2022 11:20 , Simon Hunt

Chancellor Jeremy Hunt has delayed next Monday’s critical ‘Budget’ as he raced to thrash out the final details of his plan to restore the public finances with new Prime Minister Rishi Sunak.

The Chancellor updated the Cabinet on the timing of the fiscal event. The Prime Minister and the Chancellor agreed that the fiscal event would now take place on the November 17, and would be an Autumn Statement.

Mr Hunt had been expected to set out his ‘Medium Term Fiscal Plan’ on October 31 in a bid to rebuild confidence in the Government’s handling of the economy, after Liz Truss’s disastrous mini-budget on September 23.

But with Mr Sunak only taking office on Tuesday, the Chancellor announced on Wednesday morning the fiscal event will now be pushed back to give the Prime Minister more time to consider proposed spending cuts and tax rises aimed at plugging a £30-£40billion black hole in the Government’s finances.

FTSE 100 biggest movers

Wednesday 26 October 2022 11:13 , Simon Hunt

Four hours into the trading session in London this morning, the FTSE 100 is down 30 points to 6,984.

Here’s a look at some of the biggest movers of the morning.

Pound and FTSE 250 higher, Virgin Wines upbeat

Wednesday 26 October 2022 10:17 , Graeme Evans

Sterling’s rebound continued today as markets reacted to the recession fears building in the US economy.

The pound surged another 1% to near $1.16, its highest level since mid-September and up from the $1.05 seen after the unfunded tax cuts in Kwasi Kwarteng’s mini budget.

Alongside hopes of a return to UK economic stability, the improvement reflected a weakening US dollar as traders bet that the threat of recession will cause the Federal Reserve to slow the pace of interest rate rises from December.

The softening rates outlook helped the S&P 500 index to rally 1.5% last night, but that was before Google owner Alphabet delivered a weaker-than-expected third quarter update.

The impact of global economic uncertainty meant the FTSE 100 index drifted 2.79 points to 7010.69, with tech-focused Scottish Mortgage Investment Trust among the fallers with a drop of 1%.

In contrast, the UK-led FTSE 250 index continued its outperformance by adding 78.83 points to 17,910.46. Stocks in the second tier have benefited from falling borrowing costs, with the yield on 10-year gilts its lowest since 21 September at just above 3.6%.

Today’s improvement for the FTSE 250 included a gain of 4% or 7.7p to 185.3p for Moneysupermarket.com and 49p rise to 1462p for WIzz Air.

On AIM, shares in Virgin Wines cheered half a penny at 50p after the online retailer forecast a “relatively resilient” top line performance as people socialise at home rather than take the more expensive option of going out.

Annual results for the year to July showed the addition of 105,000 new customers as profits surged to £5.1 million. House broker Liberum backed the company today with a target price of 100p.

WPP shrugs off Google ad tumble

Wednesday 26 October 2022 09:57 , Simon English

WPP was holding firm today, despite a slowdown in digital advertising reported last night by Google which sent tremors through the ad world.

The UK ad giant said revenue in the last quarter was up 10% at £3.57 billion, suggesting clients have not pulled back from big ad campaigns just yet.

Google’s figures last night showed a severe fall off at its core search ad business, something likely to hit rivals before long.

With talk of a recession growing, CEO Mark Read said: “We enter the last quarter of the year with confidence, based on the leading competitive position of our businesses, our client momentum and the knowledge that the actions we have taken to strengthen WPP leave us well placed to support our clients in navigating the economic uncertainties ahead."

It landed $1.7 billion of new business in the quarter, including from Nestle, Samsung and SC Johnson.

Inflation, especially in staff pay, is plainly a concern, with it warning that operating margins could come under pressure.

The United States and Canada North America saw strong growth, with both markets up double digits on 2019 levels, WPP said. Brazil and India were also stand-outs, although COVID-19 lockdowns weighed on China, which was down 9% in the quarter.

Western Europe was "softer", Read said, with adjusted like-for-like revenue down 2.1%, dragged lower by a COVID-19 contract in Germany in the prior year.

Bad debts loom at Barclays

Wednesday 26 October 2022 09:47 , Simon English

RISING interest rates pushed Barclays to £2 billion profit for the last three months, about £200 million better than City forecasts.

While that will please long-suffering investors, it could catch the eye of new PM Rishi Sunak, looking to fill a £40 billion hole in the public finances.

Banks argue that a windfall tax would only restrict what they could lend to companies and small customers. Critics say the extra profits are only due to rising rates and that the banks should pay.

The bank has set aside £381 million to deal with expected bad debts, but says so far it is not seeing high levels of customer distress.

CEO CS Venkatakrishnan said: “We are ready to provide support for customers and clients facing an uncertain economic environment and higher cost pressures. Whether helping retail customers to manage their finances or corporate clients navigate markets volatility, we will continue to be focused on meeting their needs.”

Santander and Standard Chartered also had strong returns today.

Neil Wilson at markets.com said: “Barclays beat expectations thanks to surging revenues at its trading business. FICC (fixed income, currencies and commodities) trading operations revenues rose 93% but there was still nearly £1bn hit from a trading error in the US. Shares not seeing much uplift from this – usual concerns about trading revenues being one-off perhaps but also investors are not confident of seeing any returns. Whilst the report card is good there is a good deal of economic uncertainty and worries about a windfall tax on banks.”

Heineken shares plunge 8% on fears of softening consumer demand

Wednesday 26 October 2022 09:42 , Simon Hunt

Shares in Heineken plunged 8% today, wiping around £3 billion from its market value after the Dutch brewer warned it had seen signs of softer consumer demand.

The Amsterdam-based firm, which also owns the Tiger, Amstel and Birra Moretti brands, saw beer volume grow 8.9% in the third quarter of 2022, and 1.9% ahead of 2019 levels, while net revenue per hectolitre grew 11.1% as a result of price rises and some consumers switching to premium products.

Heineken CEO Dolf van den Brink said: “We increasingly see reasons to be cautious on the macroeconomic outlook, including some signs of softness in consumer demand.”

Despite fears of a demand downturn, Heineken maintained its full-year forecasts and said it planned to deliver 1.7 billion euros (£1.5 billion) in efficiency savings in a bid to improve productivity and offset input cost inflation.

Fantasy novels help boost sales at publisher Bloomsbury

Wednesday 26 October 2022 09:11 , Simon Hunt

Political and economic turmoil has fuelled a boost in sales of fantasy novels, according to London-based publisher Bloomsbury, as readers turn to make-believe worlds to get away from harsher realities.

The firm posted sales of £123 million for the six months to August, up 22% amid growing demand for titles like Sarah J Maas’ bestselling ‘Crescent City: House of Sky and Breath,’ above.

Bloomsbury boss Nigel Newton said: “I think the most interesting thing is the importance of escapism for people -- we’ve seen a huge surge in orders for our fantasy novels.

“The daily soup of disaster has been served to us through the cost-of-living crisis, incompetent politicians and the war in Ukraine, every possible thing you would wish to escape and get into a book instead.”

Bloomsbury shares climbed 4% to 424p.

FTSE 100 flat, Reckitt and WPP shares 3% lower

Wednesday 26 October 2022 08:44 , Graeme Evans

The FTSE 100 index is near to its opening mark - down 7.67 points to 7005.81 - but shares in WPP and Reckitt Benckiser are down 3% following their latest updates.

WPP reported a 10% rise in third quarter revenues and “continued strong momentum” but shares fell 26.2p to 743.4p as investors also digested signs of advertising weakness following last night’s disappointing update from Google owner Alphabet.

Dettol-to-Nurofen business Reckitt grew like-for-like revenues by 7.4% in the third quarter but that failed to prevent shares falling 154p to 5812p.

On the risers board, AstraZeneca shares lifted 229p to 9982p and Mexico-based silver miner Fresnillo gained 4.4p to 718.6p on the back of a production update.

The FTSE 250 index fell 50.04 points to 17,781.59p, led by Bytes Technology as shares in the software and cloud services business fell 4% or 18.8p to 419.2p after half-year results.

Tech sector weakness hits markets, FTSE 100 seen flat

Wednesday 26 October 2022 07:43 , Graeme Evans

Futures markets are predicting a 2% fall for the tech-focused Nasdaq when trading resumes in the wake of disappointing numbers from Big Tech stocks Alphabet and Microsoft.

Alphabet’s third quarter revenues rose 6% to $69.1 billion, but this was more than $1 billion short of forecasts as advertisers cut spending by more than expected.

Hargreaves Lansdown analyst Sophie Lund-Yates said: “The slowdown in advertising revenue was not a surprise, but the speed of the slowdown was unwelcome, and the market is still highly sensitive to the changing tide.”

With earnings also below expectations, shares in the Google and YouTube business fell by 7% in after-hours trading last night.

Cautious guidance meant Microsoft shares slipped by a similar level, even though it reported stronger-than-expected revenues from its cloud-based services.

US markets closed higher prior to the tech sector updates, with investors increasingly hopeful that the Federal Reserve will slow the pace of interest rate rises from December.

CMC Markets expects the FTSE 100 index to open unchanged at 7013.

Barclays reports £2bn profit, arrears rate steady

Wednesday 26 October 2022 07:27 , Graeme Evans

Profits at Barclays hit £2 billion in the third quarter, resulting in a surplus of £5.7 billion for the year to date as lenders benefit from rising interest rates.

The quarterly profit is 6% higher than the figure for the previous year.

The potential impact of inflation and rising interest rates meant the bank’s UK division booked a credit impairment charge of £129 million in the quarter, up from a net release of £306 million the previous year.

It pointed out that arrears rates in its UK cards business remain below historical levels.

Chief executive C. S. Venkatakrishnan said: “We are ready to provide support for customers and clients facing an uncertain economic environment and higher cost pressures.”

Made.com suspends customer orders after rescue efforts fail

Wednesday 26 October 2022 07:26 , Simon Hunt

Made.com has suspended customer purchases after failing to find a buyer to rescue the beleaguered furniture business.

In a statement the company said: “In light of the fact that MDL [Made Design] is reliant on MADE for any further funding requirements and in order to preserve value for its creditors, the board of MDL has taken the decision to temporarily suspend new customer orders.

“This decision remains under review and a further announcement will be made as appropriate.”

In recent months, the company has warned it was considering cuts to staffing numbers and would need £70 million in funding to secure its future over the next 18 months.

Yesterday, Made said attempts to find a buyer had been unsuccessful. The company said: “Following further discussion, those parties have all now confirmed to the Company that they are unable to meet the necessary timetable. As a result, those discussions have been terminated and the Company is no longer in receipt of funding proposals or possible offers.”