FTSE 100 Live: Numis warns of dealmaking slowdown, private sector growth slows, shares lower
The FTSE 100 is set to open flat today after dipping by 0.1% yesterday.
AO World returned to profit despite revenue slipping, while City broker Numis has warned of a further “deteriorating market backdrop”.
‘Big job’ ahead for top cop Ephgrave as new director of the Serious Fraud Office, says the City
Wednesday 5 July 2023 13:58 , Michael Hunter
Reaction from the City is coming in to the appointment of a new chief for one of the main organisations responsible for policing the square mile.
The Serious Fraud Office will be run from the end of September by the former top Metropolitan Police Officer Nick Ephgrave. The former assistant commissioner was also chief constable of Surrey Police and was reported to be one of the potential successors to Dame Cressida Dick when she resigned from Scotland Yard.
The holder of the Queen’s Medal for Policing will take over at an organisation log-criticised for its conviction rate, not least due to the complex nature of the investigations and prosecutions it runs. The SFO works with the City of London Police and the National Crime Agency as well as the National Fraud Intelligence Bureau, among other agencies.
In reaction to Ephgrave’s appointment, day, Louise Hodges, Head of Criminal Litigation at City lawyer Kingsley Napley, said:
“The incoming director will have his work cut out as he leads the SFO in helping to tackle the country’s significant fraud problem which is widely acknowledged and during a time of legislative reform in this area. It can only be hoped that he will be provided with sufficient resources to enable the SFO to play its part, and that we will see a robust, coherent approach to enforcement going forward.”
Lloyd Firth, counsel in WilmerHale’s UK white collar defence and investigations practice, said:
“Having been in contention for the role of Metropolitan Police Commissioner, Mr Ephgrave is unlikely to be daunted by the prospect of overhauling the culture and performance of the Serious Fraud Office. As a former senior police officer, his experience will necessarily be focused more on the prevention, detection and investigation of crime, rather than the intricacies of prosecuting it, but his appointment appears to acknowledge the key role of the director in framing the direction, strategy and public perception of the SFO.”
Dr James Forder, at the free market Institute of Economic Affairs and author of a book on the SFO, said:
“The Serious Fraud Office has been embroiled in spectacular prosecutorial failures and too many individuals within it have acted inappropriately or unprofessionally. Ephgrave has a big job ahead to change the culture, reform the internal processes and ensure the SFO is fit to deliver its vital mandate.”
Read more here on the appointment.
Jon Bon Jovi wine brand enjoys sales jump at Majestic stores
Wednesday 5 July 2023 10:56 , Joanna Hodgson
Majestic Wine has said sales of Jon Bon Jovi’s drinks brand have leapt, and the rock star briefly swapped the stage to visit one of the retailer’s London stores and toast the success.
Rosé specialist Hampton Water is a joint venture between The Livin’ On A Prayer singer, his son Jesse Bongiovi and French winemaker Gerard Bertrand.
It aims to blend “the best French wine and the Hamptons laidback style”. The wine is a Southern French blend of Grenache, Cinsault and Mourvèrdre, picked from low-yielding plots in the Languedoc.
‘Absolute carnage’ as High Street lenders lift mortgage rates once again
Wednesday 5 July 2023 10:51 , Jonathan Prynn
The unprecedented spate of turmoil in the mortgage market shows no sign of abating with a slew of major High Street lenders once again today pushing up the rates on their home loan deals.
Britain’s biggest mortgage lender Halifax led the charge with yet another bout of repricing described as “absolute carnage” by one broker. TSB, Lloyds and Santander as well as several leading building societies also hiked the cost of their products yet again.
Halifax told intermediaries last night that its rates for remortgages were going up as much as 0.54% from today.
Does PMI report represent good news on inflation?
Wednesday 5 July 2023 10:29 , Daniel O'Boyle
Martin Beck, chief economic advisor to the EY ITEM Club, says the latest PMI report showed a mixed picture on inflation.
He said: “One area where the survey has provided a more accurate steer recently has been in flagging the renewed pickup in services inflation. The news from June’s survey was mixed. Respondents again reported that strong wage pressures emanating from a tight labour market were pushing up costs, which in turn were being passed onto consumers via higher prices.
“But while the costs and prices balances were again high relative to historical norms, they were lower than in recent months. If this picture is mirrored in the official data for wages and inflation, then it will allow the Bank of England to ease off the brakes. But it will take a little time for evidence of softer inflation pressures to emerge, so the EY ITEM Club thinks the rate rise cycle may not be over yet.”
Fashion firm Quiz cautions trading environment to remain challenging
Wednesday 5 July 2023 10:09 , Joanna Bourke
Womenswear brand Quiz has cautioned the trading environment is expected to remain challenging, as it showed inflationary pressures are weighing on consumer demand.
The AIM-listed retailer said sales in the first quarter to June 30 fell 15%. That was partly due to the impact of macroeconomic uncertainty, but it also reflects a strong comparison from a year earlier when the company was boosted by the removal of all Covid restrictions and high demand for dressy going-out wear.
Figures today showed revenue in the year to March 31, also helped by higher levels of full-price sales, jumped 17% to £91.7 million.
Non-executive chairman Peter Cowgill, the former head of JD Sports, said: “Demand moderated in the second half of the year as the cost-of-living pressures progressively impacted consumer spend.”
Pre-tax profit improved to £2.3 million from £800,000.
‘Renewed signs of fragility’ for service sector
Wednesday 5 July 2023 09:37 , Daniel O'Boyle
The UK private sector continued to grow in June, but at the slowest pace since March.
According to the closely watched S&P/CIPS Purchasing Managers’ Index (PMI), private sector growth slowed, with the PMI showing a reading of 52.8. Any figure above 50 represents expansion.
That came as the PMI for the dominant services sector declined to 53.7, while manufacturing remains in decline, as announced earlier in the week.
Tim Moore, Economics Director at S&P Global Market Intelligence, which compiles the survey: “The service sector showed renewed signs of fragility in June as rising interest rates and concerns about the UK economic outlook took their toll on customer demand.
“Business activity increased at the slowest pace for three months, while the rate of new order growth eased further from April’s recent peak.”
There was new hope on inflation, as input cost growth in the service sector fell to its lowest level since May 2021. Manufacturing input costs declined for the month, at the sharpest rate in seven years.
“However, cost pressures were still among the strongest seen since the survey began in July 1996 as widespread increases in salary payments offset falling fuel bills and energy prices,” Moore said.
Two-year mortgage at 6.5%
Wednesday 5 July 2023 09:13 , Daniel O'Boyle
Two-year fixed-rate mortgages have crossed the 6.5% barrier, just a day after five-year fixes crossed 6%.
According to data from Moneyfacts, the average two-year fix now brings an interest rate of 6.51%. The average five-year fix has an interest rate of 6.02%.
Products began to return to the market at higher prices today, with the number on offer jumping by 200 to 4,607.
FCA probe into whether Crispin Odey “fit and proper” for banking
Wednesday 5 July 2023 09:07 , Simon English
THE CITY watchdog said today that firms which tolerate sexual harassment are also likely to have other problems with decision making and risk management.
In the wake of the investigation into Odey Asset Management and its founder Crispin Odey, the Financial Conduct Authority said in a letter to the Treasury Select Committee: “Both individual fitness and corporate culture play significant roles in the risk a firm and its staff pose to our objectives. It is why the FCA has taken a forthright stance and leading role among UK and international regulators on nonfinancial misconduct.”
Odey faces allegations from 13 women about misconduct over several years – he denies the allegations, but his firm is in disarray with banks declining to act as brokers and funds being sold off to rivals.
The FCA is looking into whether Odey is a “fit and proper person” to work in financial services. A ban from the City is plainly a distinct possibility.
The allegations against him first surfaced from an investigation by the Financial Times.
More City gloom at Numis
Wednesday 5 July 2023 08:56 , Simon English
There was little sign of a let up in the strife in the City today, when investment bank Numis said there is still a dearth of deals in a “deteriorating market”.
Numis has grown from a niche player to one that looks after scores of big clients – though those clients are mostly sitting on their hands just now while markets wobble.
It was bought by Deutsche Bank in April for £410 million in what was seen as a sign of long-term confidence in the London financial market – and perhaps a sign that Numis was not at its strongest.
All investment banks have struggled from a moribund stock market and a lack of new flotations that have starved them off fees.
Today Numis said revenue in the third quarter was “below the first half run-rate” amid “cyclically low deal volumes”.
Deutsche offered 350p a share for Numis. The stock was today at 333p, which has the business valued at £367 million. That takeover is still expected to complete by the end of this year.
Numis, led by co-CEOs Alex Ham and Ross Mitchinson warns that “Market conditions are expected to remain difficult through the remainder” of the year.
There has been drip of job cuts across nearly all City banks with fears that much wider cuts.
Numis, which employs 330 people says fees from mergers have improved on a year ago “notwithstanding that financing markets have become more challenging in recent months”.
It added: “We expect macro-economic concerns to persist and restrict deal volumes across all investment banking products.”
AO World cheers profit growth but sales lower
Wednesday 5 July 2023 08:50 , Joanna Bourke
Shoppers are cutting back spending on non-essential home projects such as new kitchens, the boss of white goods retailer AO World said as it emerged a host of factors have dented sales.
John Roberts said the online company, which has returned to profit despite lower revenue, has seen “household pressures, which many people have” mean some reduction in discretionary spending.
However, he told the Evening Standard: “Distressed purchases, where a buyer needs to replace an essential product that has failed such as a fridge, are not something people cut back on.”
AO World said revenue fell 17% to £1.1 billion in the year to March. A chunk of the decline was due to a series of measures the firm took to cut costs and exit less profitable divisions.
Read more HERE.
FTSE 100 makes broad opening losses
Wednesday 5 July 2023 08:22 , Michael Hunter
There was a broad fall for the FTSE 100 in opening trade, ahead of economic data due later in the morning that will shed light on the fortunes of the UK’s dominant services sector.
Some of the biggest falls came for real estate trusts, as pressure on property stocks lingered. British Land was the single biggest faller, down 7p at 312p, a drop of around 2%. Segro fell over 12p to 728p, down 1.7%.
Heavily-weighted miners also came under pressure, after a stronger showing earlier in the week lost ground. Anglo American fell 35p to 2296p. Chilean copper giant Antofagasta was down 18p at 1484p.
Only a dozen or so of its constituent were stocks not in retreat as the index lost just over 25 points overall to 7494.57, a decline of 0.3%.
The risers shared defensive properties, led by vaccine and drugmaker AstraZeneca, up 102p, or 1%, to 10672p. BAE Systems was 3p higher at 911p.
The Purchasing Managers’ Index for June, is due at 9.30 a.m. and will help shape the outlook for the UK economy . It is expected to point to a rise in activity by coming in over 50, at 53.7, up from 55.2 last time. There will also be composite PMI data for the whole of the economy, expected to be 52.8, also showing growth, but down from the 54 last time.
AI tech shift is ‘most profound’ seen in our lifetimes, says Google UK boss
Wednesday 5 July 2023 07:52 , Daniel O'Boyle
The rise of artificial intelligence (AI) marks the “most profound” technology shift in our lifetimes and has the potential to boost Britain’s economy by £400 billion by the end of the decade, according to a report by tech giant Google.
In the firm’s first report on its economic impact in the UK for three years, Google said AI technology – such as the firm’s chatbot Bard and rival Microsoft’s ChatGPT – has the power to “turbocharge” UK productivity, which has been in decline for many years, by helping people back to work and unlocking new ways of working.
Redde Northgate: Low supply of vans will continue in medium term
Wednesday 5 July 2023 07:30 , Daniel O'Boyle
Commercial vehicle rental firm Redde Northgate says demand for vans is still outstripping supply, which helped push profit up by a third to £178.7m.
The business upped its fleet to 130,000 vehicles, but said that there was still a scarcity of light commercial vehicles, which include most types of van. This shortage of supply has boosted residual values.
It added that the lower supply will continue in the medium term.
Martin Ward, CEO of Redde Northgate, said: “This is an excellent set of results and we are proud of what the Group and all our colleagues have achieved this year, delivering record revenue and profits and strong levels of cash generation.
“Our integrated mobility platform has helped to drive growth and offers significant efficiencies for ourselves and customers. Vehicle supply is improving but remains below the high levels of customer demand; our financial strength provides an ability to react quickly to supply opportunities as they arise.”
FTSE 100 set to tick lower with data from service sector in focus
Wednesday 5 July 2023 07:23 , Michael Hunter
London’s main stock market is expected to continue drifting lower in opening trade, with attention turning to numbers out this morning from the dominant services sector of the economy.
The Purchasing Managers’ Index for last month, due out at 9.30 a.m. will play into expectations for the state of the UK economy and the. outlook for inflation. It is expected to point to a rise in activity by coming in over 50, at 53.7, up from 55.2 last time. There will also be composite PMI data for the whole of the economy, expected to be 52.8, also showing growth, but down from the 54 last time.
Similar data from European economies will come out thoughout the morning, adding to investors impressions on the outlook for growth.
US markets also return to the action, having been closed for the Independence Day break on Tuesday. There are also minutes out tonight from the last interest rate setting meeting from the Federal Reserve.
In the meantime, the FTSE 100 is predicted to ease back by around 5 points to 7514.
Yesterday’s top stories
Wednesday 5 July 2023 06:43 , Daniel O'Boyle
Good morning, here is a selection of yesterday’s top stories:
Facebook, Twitter and Instagram owner Meta is to launch Threads on Thursday, with the new app looking set to be the biggest rival yet to Elon Musk’s Twitter
Sainsbury’s says food prices are falling and its 100 most popular items are cheaper than in March, as it claimed to be leading the way in the battle against inflation
The average interest rate on a five-year fixed-rate mortgage is now more than 6%, after two-year mortgages crossed that threshold last month
Today, we’ll have results from:
AO World
Topps Tiles
Redde Northgate
Quiz
Supreme Plc
