Yahoo Finance FTSE 100 Live: Inflation at 10.1% as food prices surge, fuels rates rise pressure
UK inflation is back in double digits after soaring food and drink prices sent September’s annual rate to an equal 40 year high of 10.1%.
Today’s reading from the Office for National Statistics is higher than City expectations of 10% and compares with 9.9% last month.
It adds to pressure on the Bank of England to announce another big hike in interest rates when policymakers meet early next month.
FTSE 100 Live Wednesday
Inflation hits joint 40-year high at 10.1%
Banking shares hit by tax raid speculation
ASOS reports big loss but shares rise
New York stocks make steady start as investors track earnings news
Wednesday 19 October 2022 14:51 , Michael Hunter
New York’s S&P 500 made a steady start to trade as mainly well-received earnings news from the likes of Procter & Gamble and Netflix offset falls for banks and a slump for one of its components that missed forecasts, Generac.
The maker of back-up power generators tumbled by over 20% after it cut its sales guidance and missed analysts forecasts for the third quarter,
Netflix, which reported a return to subscriber growth after the close of the previous session, rose 13%. Procter & Gamble, which reported quarterly earnings and sales ahead of forecasts, rose almost 3%.
Overall, the broad New York index slipped 5 points to 3714.69, a drop of 0.1%.
What went wrong at Asos?
Wednesday 19 October 2022 14:50 , Simon English
It’s not so long ago that Asos was a darling of both the stock market and the trendy twenties who thought fast fashion had changed their lives.
The business that was first As Seen On Screen had a brilliant niche, making copycat versions of clothes showcased by the rich and famous at amazing speed.
It was an impressive operation. Asos shares boomed, to more than 7500p at one point in March 2018.
Over the past five years, that same stock is down 90%. The company’s relevance and cleverness seems to have been fleeting.
What went wrong?
Price rises help lift Procter & Gamble’s earnings past forecasts, Wall Street set for higher open
Wednesday 19 October 2022 13:51 , Michael Hunter
Rising prices on a range of consumer products made by US giant Procter & Gamble helped its profit and revenue beat forecasts, helping cheer Wall Street futures.
The company behind Head & Shoulders shampoo and Ariel washing powder reported quarterly net sales of over $20 billion, narrowly ahead of forecasts. Earnings per share, the metric most watched by analysts, came in at $1.57, better than the $1.54 predicted according to a poll from Refinitiv, the financial data provider.
Its shares were up 0.8% in pre-market trade.
Overall, futures pointed to a 42 point gain for the S&P 500, which would take the broad New York stock index to 3719.98, a rise of 1.1%.
FTSE 100 down 12 points: lunchtime update
Wednesday 19 October 2022 13:00 , Simon Hunt
Four hours into the trading session in London, the FTSE 100 is down 12 points. Here’s a look at some of the biggest movers of the day so far:
The pound takes a knock as inflation’s return to a 40-year peak stokes worries on the economy
Wednesday 19 October 2022 12:56 , Michael Hunter
Sterling came back under pressure as traders consider the economic implications of inflation topping 10% once again.
The pound was down 0.8% to $1.1227, having closed above $1.13 at the end of the previous session. The slip came even as the data for September looked to open the way for a jumbo rate hike from the Bank of England at its next meeting on November . City traders and analysts were pointing to the ways in which pressure on the BoE has been offset by the recent demolition of the UK’s “mini-Budget”, including the reduction in duration of measures to subsidise energy bills.
James Smith, developed market economist at ING, said: “The dramatic scaling back of fiscal support by the new Chancellor will be seen as lowering medium-term inflation, and that’s what BoE policymakers will be more interested in. We’ve scaled back our forecast for November’s meeting to a 0.75% rate hike, from 1% previously.”
The return of inflation to double digits, driven by food costs, stoked concern at the extent to which prices are rising at a time when the economy is also heading toward recession.
Danni Hewson, financial analyst at AJ Bell said: “Businesses are also worried. They’re fighting their own cost battles and dealing with falling consumer confidence and dwindling discretionary spend. They’re also eyeing today’s inflation number with some trepidation and considering what it’s going to do to their business rate costs.”
Private equity puts £9m into sustainable fish farming firm
Wednesday 19 October 2022 12:19 , Simon Hunt
The Square Mile’s ambitions for eco-friendly investing got a boost today as London-based private equity business Ocean 14 Capital committed €10 million (£9 million) to help grow Brazilian sustainable fish business Tilabras.
The funds will be used to expand Tilabras’s base, where it farms local fish tilapia. The investment is set to increase capacity and improve efficiency of production.
Tilapia aquaculture is six times more efficient than cattle farming at converting plant-based feed into animal proteins, according to Tilabras. The fish are also more affordable than other commonly farmed fish while Tilabras’s production model lets the fish be fed on a sustainable vegan diet while minimising its COâ‚‚ footprint.
It’s the third investment by Ocean 14 Capital, which claims to be the first major investment fund focusing exclusively on the “blue economy” since its launch in December 2021.
Tilabras founder Nicolas Landolt said: “Ocean 14 Capital’s expertise, knowledge, and the fund’s ability to execute will help us enhance growth while improving resource efficiency.”
Top City investment houses count cost of turmoil in stock and bond markets
Wednesday 19 October 2022 11:06 , Simon Hunt
SOME of the best-known names in the City offered fresh insight into the impact of simultaneous tumbles for stock and bond markets this year as investors pulled money from fund managers.
Man Group, one of the largest listed hedge funds in the world, said the third quarter was “very difficult for the asset management industry” as it reported a fall of almost $4 billion in assets under management to just above $138 billion.
The FTSE 250 company also took a $4.5 billion hit from the stronger dollar in the third quarter and net outflows from its funds of £500 million. Its “absolute return strategies” brought in $1.6 billion from a blend of investments designed to prosper during falling markets, rather than just out-running overall rises.
Man called that “a strong investment performance.” Its traditional long-only funds lost $1.4 billion. Rathbones, one of the Square Mile’s oldest investment houses, reported a £1 billion drop in funds under management and administration of £57.9 billion.
Quilter, the wealth manager formerly known as Old Mutual, posted a fall of almost £12 billion in assets under management and administration to just under £97 billion. It said the decline reflected “a challenging market backdrop over the summer”. But it kept money coming into its funds, with net inflows of £ 200 million.
Revolut locks horns with Airbnb with the launch of holiday home business
Wednesday 19 October 2022 10:40 , Simon Hunt
Revolut is looking to lock horns with Airbnb as the fintech giant launches its own holiday home rental business.
The London-based firm is hoping to tempt its debit card customers away from booking with its San Francisco rival with the promise of up to 4% cashback on every rental, alongside the ability to split the bill between holidaymakers automatically and more competitive exchange rates for overseas travel.
Customers will be able to explore, book and pay for their stays using the Revolut app.
Christopher Guttridge, General Manager of Lifestyle Products at Revolut, said: “When it comes to travel, we know that our customer’s needs are changing more and more. Big or small, budget or bougie, local homes or chic-hotels - our customers want to book any kind of place, all in one place.”
Banks slide on tax fears, FTSE 250 down 1.5%
Wednesday 19 October 2022 10:18 , Graeme Evans
Shares in Lloyds and NatWest have fallen as speculation mounts that Chancellor Jeremy Hunt is lining up a tax raid on their earnings.
Hunt’s plans for tackling the £40 billion hole in the public finances are due on 31 October, with the Financial Times reporting that the increased profitability of companies in the banking and energy sectors will be in his sights.
Banks currently pay a combined tax rate on their profits of 27%, which is made up of corporation tax at 19% and a bank surcharge of 8%.
The latter was supposed to drop back to 3% when corporation tax rises to 25% next year.
If Hunt instead opts for a surcharge of 5%, the FT estimates that the Treasury could rake in an additional £500 million a year or more as industry profits rise on higher interest rates.
The speculation provided another setback for investors, with Lloyds falling 4% or 1.8p to 40.8p and NatWest losing 6.8p to 229.9p. In contrast, shares in Asia-focused HSBC improved 4.4p to 470.15p.
Michael Hewson, chief market analyst at CMC Markets, called the planned move “incredibly short-sighted”.
He said: “It seems ludicrous to double down on windfall taxes on a sector that dares to make too much in the way of profit. It’s also an odd way to encourage longer term investment into the UK economy, which is crying out for inward investment.”
Hunt is due to extend the government’s windfall tax on oil and gas producers beyond 2025, but this speculation failed to dent shares as BP added a penny at 446.4p and Shell drifted 7p to 2246p.
The FTSE 100 index lost 36.94 points to 6899.80, while the UK-focused FTSE 250 index slid 1.5% or 253.74 points to 17,275.57 as fears over more aggressive interest rate rises were fuelled by today’s 10.1% inflation print.
Retailers were heavily sold as JD Sports Fashion shed 2% or 2.44p to 96.5p and FTSE 250-listed Currys and Marks & Spencer fell 2.8p to 62.85p and 2.3p to 101p respectively.
Analysts react as inflation hits 40-year high
Wednesday 19 October 2022 09:09 , Simon Hunt
City analyst have reaced to new data released by the Office for National Statistics today showing inflation had reached a 40-year high of 10.1%.
Matthew Ryan – Head of Market Strategy at global financial services firm, Ebury., said: “Sterling edged lower against its peers after yet another upside surprise in the latest UK inflation data. While this would ordinarily be perceived as bullish for the pound, investors are clearly concerned about the impact of the rising cost of living on household disposable incomes.
“The outlook for the UK economy remains relatively murky, with ballooning borrowing costs, soaring consumer prices and a government in chaos with its credibility shot to bits unlikely to inspire much confidence.
Douglas Grant, Group CEO at Manx Financial Group PLC, said: “This announcement yet again signals just how difficult the next few months and beyond are going to be.
“We believe that demand for working capital, which has already reached unprecedented levels, will soar even further as more businesses desperately require liquidity provisions to counteract rising interest rates, supply chain issues, increases in wages and additional pandemic-induced headwinds. “
Banks and retailers struggle in flat FTSE 100 trading
Wednesday 19 October 2022 08:30 , Graeme Evans
Lloyds Banking Group shares are down 4% and NatWest 3% lower amid speculation that Chancellor Jeremy Hunt is considering a windfall tax on the sector. The declines also come in the wake of today’s higher-than-expected inflation print of 10.1%.
The wider FTSE 100 index is up 7.75 points at 6944.49, but JD Sports Fashion joined a clutch of UK-focused retailers in the red as its shares slipped 1.6p to 97.3p.
Energy stocks offered support to the top flight following a rise in the price of Brent crude, with BP shares up 7p to 452.25p and Harbour Energy 4.2p higher at 3887.8p. GSK and former consumer healthcare division Haleon also improved 1%.
The FTSE 250 index lifted 16.52 points at 17,545.83, but Virgin Money shares fell 4% and retailers Currys and Marks & Spencer lost 2%.
Asos chases former glories
Wednesday 19 October 2022 07:37 , Simon English
Asos plunged to a loss of nearly £10 million for the year as the online fashion retailer struggled with a tough consumer climate and troubles with its own finances.
The fast fashion firm has been in talks with lenders over a £350 million loan deal as it strives for more flexibility in uncertain financial times.
Today it said sales for the year to August had held up well, up slightly at £3.93 billion,, suggesting the business retains its core popularity among young internet shoppers.
It made profit before tax of £22 million, about what the City was expecting. But an overall operating loss.
CEO Jos é Antonio Ramos Calamonte said: "ASOS is a strong business with a compelling brand, customer offer and fashion credibility, with dedicated and passionate employees. Against the backdrop of an incredibly challenging economic environment, this unique combination has enabled our business to deliver a resilient performance this financial year in the UK - but I know we as a Company can achieve far more.”
Asos was once a darling of the stock market. It shares are down 90% this year and will open today at 511p. That leaves the business valued at £510 million, a far cry from former glories.
Netflix boost for Wall Street, FTSE 100 seen higher
Wednesday 19 October 2022 07:35 , Graeme Evans
Streaming giant Netflix’s better-than-expected quarterly results have given a further boost to Wall Street confidence as the decent week for US shares looks set to continue.
Netflix recorded the third quarter addition of 2.4 million paying subscribers, which was much higher than the one million forecast by analysts beforehand and comes after two successive quarters of declines.
Shares jumped 14% in trading after Wall Street’s closing bell, leading to expectations for further gains for leading US benchmarks when dealings resume later.
Encouragement from many of the other companies to have reported so far helped the Dow Jones Industrial Average and S&P 500 to lift 1% last night, adding to big gains seen on Monday.
The FTSE 100 improved 1.2% and the FTSE 250 index gained 0.2% yesterday, with CMC Markets looking for London’s top flight to open 42 points higher at 6978 this morning.
Orders down 15% at Just Eat Takeaway
Wednesday 19 October 2022 07:26 , Simon Hunt
Orders fell 15% at Just Eat Takeaway in the UK and Ireland over the past quarter, as cash-strapped Brits cut back on takeaway orders in a bid to reduce spending. Total Southern Europe orders fell 17% while orders fell 11% overall.
Gross transaction value, a measure of the size of each order, fell 5% in the UK and Ireland, suggesting that the value of each order with the firm had increased.
Just Eat CEO Jitse Groen said: “Although the consumer backdrop will likely be challenging due to the macro-economic environment, Just Eat Takeaway.com owns many leadership positions of significant scale, is well-capitalised through the sale of the iFood stake and is therefore well-positioned to capture profitable future growth.”
Jeremy Hunt reacts to sky-high inflation
Wednesday 19 October 2022 07:17 , Simon Hunt
Chancellor Jeremy Hunt has reacted to the news of inflation has topped 10% in September.
In a statement Hunt said: “I understand that families across the country are struggling with rising prices and higher energy bills.
“This government will prioritise help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone
“We have acted decisively to protect households and businesses from significant rises in their energy bills this winter, with the government’s energy price guarantee holding down peak inflation.”
Soaring food prices help inflation top 10%
Wednesday 19 October 2022 07:13 , Simon Hunt
The rate of inflation hit an equal 40 year high of 10.1 per cent last month as soaring food prices forced up the cost of living.
The Consumer Prices Index - the headline measure of inflation - rose from 9.9 per cent to 10.1 per cent, the same level it reached in July and the joint highest level since 1982. Prices rose by 0.5 per cent during September, according to the office for National Statistics (ONS).
Food prices soared by 14.6 per cent, the fastest rate of increase in 40 years, while the cost of eating out and staying in hotels went up by 9.7 per cent.
ONS Director of Economic Statistics Darren Morgan said: “After last month’s small fall, headline inflation returned to its high seen earlier in the summer. The rise was driven by further increases across food, which saw its largest annual rise in over 40 years, while hotel prices also increased after falling this time last year.
“These rises were partially offset by continuing falls in the costs of petrol, with airline prices falling by more than usual for this time of year, and second-hand car prices also rising less steeply than the large increases seen last year.
“While still at a historically high rate, the costs facing businesses are beginning to rise more slowly, with crude oil prices actually falling in September.”
The latest rise in inflation puts even more pressure on the Bank of England to order a huge hike in interest rates next month to rein it back on. City traders expect the Ban’s rate to go up by as much as a full percentage point. Fixed mortgage rates have already risen sharply in anticipation of the Bank’s more with two year fixes passing 6.5 per cent yesterday.
Shadow Chancellor Rachel Reeves said: “Inflation figures this morning will bring more anxiety to families worried about the Tories lack of grip on an economic crisis of their own making.
“It’s clear that the damage has been done. This is a Tory crisis, made in Downing Street and paid for by working people.
“The facts speak for themselves. Mortgage costs are soaring. Borrowing costs are up. Living standards down. And we are forecast to have the lowest growth in the G7 over the next two years.
“What we need now is to restore financial credibility, and a serious plan for growth that puts working people first. That is what Labour will bring.”
