FTSE 100 Live: Jeremy Hunt to stay as chancellor; HSBC profits fall

Rishi Sunak says he “has work to do to restore trust” as he spoke for the first time after becoming Prime Minister on Tuesday morning. Gilt yields calmed to their lowest level since before the disastrous mini-Budget on 23 September.

HSBC kicked off the UK banking sector’s earnings season today by revealing “strong momentum” after net interest income surged on the back of rising interest rates and it retained a “tight grip” on costs.

The optimism of boss Noel Quinn came as the lender reported profits of $3.1 billion, a fall of 42% on the year before due to one-off charges linked to the planned sale of its retail banking business in France.

FTSE 100 Live Tuesday

• HSBC shares fall sharply after Q3 results

• Whitbread eyes faster Premier Inn expansion

• Pendragon warns car shortage to continue

Pound returns to mini-Budget levels, FTSE 100 closes at 7,013: Evening FTSE wrap

Tuesday 25 October 2022 17:05 , Simon Hunt

The pound crept back to the level it was against the dollar before the announcement of the disadisastrous mini-Budget in September, edging towards $1.1, as the market was calmed by the arrival of ex Goldman Sachs employee Rishi Sunak as prime minister. Gilt yields also returned to pre-mini Budget levels.

The FTSE 100 closed at 7,013 after a drop in earnings from HSBC sent its shares down 7%. Standard Chartered also fell around 4%.

Dan Ashmore, Financial Analyst at Invezz, said:“While new Chancellor Jeremy Hunt had already confirmed Truss’ infamous mini-budget has been walked back in nearly every regard, Sunak nonetheless has a huge job on his hands to restore faith in the UK economy – and the pound sterling – after Truss’ mini-budget calamity.

“The biggest hit to the UK over the last month has been the startling dent to credibility. Investors have already been fleeing the pound en masse since the start of the year – it is down 17% against the dollar – and Sunak will need to re-affirm the UK as a reputable, tier-1 economy, as opposed to the u-turning, indecisive and poorly-planned regime it has looked like over the past month, which scared investors so much.”

How much is Rishi Sunak worth? The wealth of the UK’s richest prime minister

Tuesday 25 October 2022 16:35 , Simon Hunt

Rishi Sunak’s father-in-law Narayana Murthy is the founder of Indian IT company Infosys. His wealth is valued at $4.5 billion (£3.9 billion) according to Forbes. Infosys now has a market cap of around £67 billion.

Sunak’s wife Akshata Murty controls about 0.9% of the share capital of Infosys, which is worth £629 million, according to Refinitiv data. Sunak’s brother-in-law Rohan Murty controls a 1.5% stake in the business worth £982 million, giving the siblings a combined stake of over £1.6 billion.

On top of their shareholding of Infosys, the family also receive dividends. Akshata Murty is estimated to have received Infosys dividends worth £13.7 million since last year.

Murty and Sunak, who married in 2009, own a string of luxury properties worth an estimated £15 million, from a Pacific Ocean facing penthouse apartment in celebrity enclave Santa Monica, to a rambling Georgian manor house in North Yorkshire.

read more here: How much is Rishi Sunak worth? The wealth of the UK’s richest PM

Sunak will do his best for Britain, billionaire father-in-law says

Tuesday 25 October 2022 16:04 , Simon Hunt

Rishi Sunak’s billionaire father-in-law Narayana Murthy has offered his congratulations to the new prime minister.

In a statement he said: "Congratulations to Rishi. We are proud of him and we wish him success. We are confident he will do his best for the people of the United Kingdom."

Murthy is the founder of Indian IT company Infosys. His wealth is valued at $4.7 billion according to Forbes.

Jacob Rees-Mogg out but Jeremy Hunt stays in: Rishi Sunak’s reshuffle

Tuesday 25 October 2022 15:32 , Simon Hunt

Jacob Rees-Mogg, Brandon Lewis, Chloe Smith and Kit Malthouse are out of Rishi Sunak’s cabinet but Jeremy Hunt is expected to remain as Chancellor.

Read the full comings and goings of Rishi Sunak’s Cabinet, with political reporter Rachael Burford, here.

Wall Street open: US stocks rise but earnings results mixed

Tuesday 25 October 2022 14:46 , Simon Hunt

US stocks made gains in the opening minutes of trading in New York after a string of quarterly earnings presented a mixed picture for the global economy.

The Nasdaq went up 0.4% while the S&P rose just 0.06%.

Coca Cola raised its revenue forecast after demand remained resilient despite price rises, while Chevrolet owner General Motors reported strong third-quarter that lifted investor hopes of a deeper global economic recession.

However, General Electric cut its full-year profit forecast after its third-quarter earnings fell short of expectations.

Gilt yields return to pre-mini Budget levels

Tuesday 25 October 2022 14:22 , Simon Hunt

After a tumultuous few weeks following September’s mini-Budget in which the Bank of England had to intervene with a multi-billions pound bond-buying programme to reassure spooked markets, gilt yields have now returned to pre-mini-Budget levels with the arrival of Rishi Sunak as prime minister.

Here’s a look at the wild ride of two-year gilt yields over the past two months:

Jeremy Hunt to remain chancellor under Rishi Sunak

Tuesday 25 October 2022 13:42 , Simon Hunt

Jeremy Hunt is set to remain as Chancellor, according to Sky News reports. Hunt stepped into the role little over a week ago following the exit of Kwasi Kwarteng after markets were spooked by his so-called mini-Budget.

Jacob Rest-Mogg resigns as business secretary

Tuesday 25 October 2022 13:15 , Simon Hunt

Jacob Rees-Mogg resigned from the Government after Rishi Sunak became Prime Minister, a source close to the outgoing Business Secretary told the PA news agency.

The source added: “He knows he was very close to the previous two regimes and it didn’t seem likely he was going to be appointed in the new Cabinet.

“He’s happy to support the Prime Minister from the backbenches.”

Lunchtime update: HSBC down the most after FTSE 100 falls 45 points

Tuesday 25 October 2022 13:09 , Simon Hunt

Five hours into the trading session in London, here’s a look at some the day’s biggest movers on the FTSE.

HSBC was the morning’s biggest loser, down around 7% after posting a sharp fall in profits. That’s had a knock on effect on banking peer Standard Chartered. Segro was the biggest gainer, up 2.4%.

The FTSE 100 fell 45 points overall to 6,969.

Recap: how the gilts market responded as Rishi Sunak was confirmed as prime minister

Tuesday 25 October 2022 12:41 , Simon Hunt

After a tumultuous few weeks in the UK government bond markets, here’s a look back at how gilt yields dropped yesterday morning after Boris Johnson withdrew from the Conservative Party contest and it became clear Rishi Sunak was to become Britain’s next prime minister.

Recap: how the gilts market responded as Rishi Sunak was confirmed as prime minister

Tuesday 25 October 2022 12:41 , Simon Hunt

After a tumultuous few weeks in the UK government bond markets, here’s a look back at how gilt yields dropped yesterday morning after Boris Johnson withdrew from the Conservative Party contest and it became clear Rishi Sunak was to become Britain’s next prime minister.

Market calm after Sunak speech

Tuesday 25 October 2022 12:14 , Simon Hunt

The markets stayed relatively calm after Rishi Sunak’s debut speech as prime minister in which he said of Liz Truss’s premiership “mistakes were made” and promised to fix them.

The pound hovered aroud the $1.1330 mark and is up 0.5% on yesterday.

10-year and 30-year gilt yields fell slightly. The FTSE 100 hovered around 6,970 and is down around 40 points since markets opened.

Rishi Sunak speaks outside Downing Street

Tuesday 25 October 2022 11:54 , Simon Hunt

Rishi Sunak addressed the nation outside Downing Street after becoming Britain’s new prime minister.

Sunak said: “It is only right to explain why I’m standing here.”

“Right now our currents facing a profound economic crisis.

“Some mistakes were made. Not born of will or bad intentions..but mistakes nonetheless.”

“I have been elected as prime minister in part to fix them and that work comes immediately. This will mean difficult decisions to come.

“I understand how difficult this moment is after the billions of pounds it cost us to combat covid.

“I fully appreciate how hard things are and I understand too that I have work to do to restore trust after all that has happened. All I can say is that I am not daunted. I know the high office I have accepted and I hope to live up to its demands.”

Rishi Sunak arrives at Buckingham Palace to meet King Charles

Tuesday 25 October 2022 11:07 , Simon Hunt

After Liz Truss tended her resignation, Rishi Sunak has arrived at Buckingham Palace to meet King Charles where he will be formally made prime minister.

New FCA rules target bogus claims on ‘green’ investments

Tuesday 25 October 2022 11:00 , Simon Hunt

A City watchdog has ordered a clampdown on phoney “greenwashing” claims made for investment products that are marketed as sustainable.

The Financial Conduct Authority is proposing a series of new rules that tighten up the labelling and increase disclosure of products that are sold as green by investment managers.

The FCA said: “Exaggerated, misleading or unsubstantiated claims about ESG credentials damage confidence in these products. The FCA wants to ensure that consumers and firms can trust that products have the sustainability characteristics they claim to have.”

Sacha Sadan, the FCA’s director of environment social and governance, said: “Consumers must be confident when products claim to be sustainable that they actually are. Our proposed rules will help consumers and firms build trust in this sector…This places the UK at the forefront of sustainable investment internationally.”

A consultation on the proposals runs until 25 January with the final rules expected by summer 2023.

Liz Truss recommits to scrapping national insurance hike as she leaves Downing Street

Tuesday 25 October 2022 10:34 , Simon Hunt

Liz Truss has given a speech as she prepares to leave Downing Street as she becomes Britain’s shortest prime minister.

“It has been a huge honour to be Prime Minister of this great country,” Liz Truss has said in her farewell speech.

“This Government has acted urgently and decisively.

“We are taking back our energy independence so we are never again beholden to fluctuating markets.”

Ms Truss noted to her Cabinet that they had stuck to her pledge of scrapping the national insurance hike imposed by Rishi Sunak as chancellor.

In its account of her final Cabinet meeting, Downing Street said: “The Government also stuck to its pledge to scrap the rise in national insurance and demonstrated its steadfast commitment in supporting Ukraine in its fight against Russia’s war of aggression.”

THG shares rally after update, FTSE 100 lower

Tuesday 25 October 2022 10:26 , Graeme Evans

THG’s robust outlook and new banking facilities led to a rebound for ailing shares in the e-commerce company today.

THG has lost more than 80% of its stock market value this year, but shares rallied 19% after its third quarter update.

The sales growth of 2.1% was short of some City expectations but an upbeat founder and chief executive Moulding added that THG’s final quarter of 2022 had started positively and that it was well positioned for a significant uplift in demand during Black Friday trading.

His comments came as THG confirmed the signing of a new three-year £156 million banking facility, provided equally by existing lenders BNP Paribas, HSBC and NatWest.

Moulding added: “As commodity prices ease further, we remain well positioned to grow margins into 2023, whilst reducing pricing to consumers. This positions the group well in continuing to expand market share.”

Shares were 8.7p higher at 55.2p, which compares with a price near 39p when Japan’s SoftBank sold its stake in the company last week.

Today’s update provided some reassurance for other e-commernce retailers as ASOS shares lifted 29p to 546.5p and Boohoo cheered 1.1p to 38.5p.

Growth stocks featured on the FTSE 100 risers board, with Flutter Entertainment among those higher after a rise of 160p to 10,935p. However, the top flight’s overall performance was below expectations with a decline of 29.79 points to 6984.20.

The FTSE 250 index stood 38.31 points higher at 17,375.86 as UK-focused stocks continued to benefit from this week’s fall back in gilt yields.

The mood was supported by some robust trading updates, with IT services business Softcat initially 3% higher after it continued its unbroken record of annual growth in operating profit. The company also raised its full-year dividend by 15%, but shares were later 7p cheaper at 1113p.

On The Beach shares also gave up their initial strong start, having risen after the online holidays retailer stuck to full-year profits guidance with sales 16% stronger than pre-Covid. The All-Share stock was later 3.2p lower at 89.3p.

Car shortage to continue, warns Pendragon

Tuesday 25 October 2022 10:19 , Simon English

A SHORTAGE of new and used cars will continue to hurt sales at leading dealer Pendragon, it warned today.

New car production has been hit by a lack of computer chips and other materials, sending the cost of second hard cars soaring.

Pendragon, which owns the Evans Halshaw and Car Store brands, saw profits in the last three months slip from £21.5 million to £14.7 million.

Chief executive Bill Berman said: "While supply chain challenges and other market pressures are set to persist, we are confident we have the right strategy in place to deliver for our customers and partners, and to meet our expectations for the full year."

The company has lately been subject to a cyberattack and ransom claim by hackers demanding £54 million. Pendragon says it has taken steps to protect its IT systems and will not be “held hostage” by the hackers, said to be part of the group known as LockBit 3.0.

The chip shortage has hit the entire sector. Last week Toyota admitted its production target will fall due to the lack of semiconductors.

Pendragon shares were steady today at 27p.

FTSE 100 weakens, HSBC shares down 5%

Tuesday 25 October 2022 08:32 , Graeme Evans

The FTSE 100 index has underperformed after HSBC shares slumped 5% on the back of its third quarter results.

London’s top flight stood 21.12 points lower at 6992.87, giving back a chunk of the gains seen in Monday’s stronger session.

HSBC shares were down 23.45p to 451.65p after the banking giant downgraded expectations for net interest income in 2023 to a figure of at least $36 billion, compared with the $37 billion forecast at the time of half year results.

It blamed sterling depreciation against the US dollar and a higher cost of funding in its trading book for the reduction. In contrast, expectations for 2022 have been increased to at least $32 billion based on the current market consensus for interest rates.

HSBC’s capital buffer of 13.4% was below its medium-term target range of 14% to 14.5%, a level it intends to get back to in the first half of next year through revenue growth and cost control.

The bank said: “Once we are back within our target range, we intend to continue to manage capital efficiently, returning excess capital to shareholders where appropriate.”

The UK-focused FTSE 250 index added 74.36 points to 17,411.91, with IT services business Softcat up 2% after its latest trading update.

Stevenson out at HSBC

Tuesday 25 October 2022 08:15 , Simon English

HSBC today parted company with its £3.5 million a year finance chief Ewen Stevenson, a shock move that could unnerve markets looking for stability.

The former Royal Bank of Scotland executive, credited with helping to turn around the once bust state owned lender, is to be replaced by Georges Elhedery as group chief financial officer in January.

Stevenson was paid nearly £2 million last year with a bonus of £1.7 billion.

Chairman Mark Tucker, widely regarded as a City bruiser, said in a statement that he “would like to thank Ewen for all he has done for the bank”. He “leaves with our very best wishes”.

Amid talk of a possible windfall tax on banks, HSBC saw profits down 40% in the third quarter to $3.15 billion, largely due to an impairment charge of $2.4 billion connected to the sale of its French arm.

That was still way better than City forecasts, however.

CEO Noel Quinn said: "We maintained our strong momentum in the third quarter and delivered a good set of results. Our strategy produced good organic growth in all three global businesses, and net interest income increased on the back of rising interest rates. We retained a tight grip on costs, despite inflationary pressures, and remain on track to achieve our cost targets for 2022 and 2023. We are focused on executing our plans and delivering our returns target of at least 12% from 2023 onwards and, as a result, higher distributions to our shareholders.”

HSBC shares tumbled on the results, down 25p to 450p.

Quinn said of Stevenson’s replacement Elhedery that he has a “strong focus on execution”.

Whitbread eyes faster Premier Inn expansion after demise of independent hotel sector

Tuesday 25 October 2022 08:13 , Simon Hunt

Whitbread has said the demise of the independent hotel sector post-Covid has helped its Premier Inn brand scout new opportunities as it posted a boost in profits.

The company has increased its target to increase the number of Premier Inn rooms to 125,000 from 110,000 as it eyes rapid expansion.

It posted pre-tax profits of £307 million in the six months to September, while sales more than doubled to £1.3 billion.

The firm said: “The decline of the independent hotel sector is accelerating and having now completed our network planning exercise and our assessment of the UK market, we believe that the total volume of room supply is currently some 4% lower than it was pre-pandemic, creating a favourable market backdrop and providing increased opportunity for Premier Inn to grow market share.”

Whitbread shares dropped 2% to 2,557p in early trading.

FTSE 100 to hold above 7000, US markets rally

Tuesday 25 October 2022 07:42 , Graeme Evans

The FTSE 100 index is expected to consolidate its position above the 7000 threshold today after the Dow Jones Industrial Average rose 1.3% to close at its highest level in six weeks last night.

The recent rebound in US markets appears to have been driven by expectations that the Federal Reserve may be close to slowing the current pace of interest rate rises.

The improved sentiment will be tested after Wall Street’s closing bell when the first of the Big Tech heavyweights post figures, with Microsoft and Google owner Alphabet due to report.

London’s positive start to the week followed a Monday afternoon rally for the FTSE 100 index, which closed 44 points or 0.6% higher at 7013. The UK-focused FTSE 250 cheered 0.8% as trading reflected calmer conditions for gilt markets after the appointment of Rishi Sunak as prime minister.

CMC Markets expects the FTSE 100 index to open three points higher at 7017, but pressure in currency markets is continuing after the pound stood at below $1.13.