BUSINESS CLOSE: Retail sales fall but services sector sees fast growth
The FTSE 100 has rebounded after a turbulent week, closing up 0.2 per cent, or 14 points, to 7,204, while the UK-focused FTSE 250 has closed also 14 points higher at 22,931.The pound fell back slightly after weaker-than-expected retail sales figures, but remained close to recent highs.Sterling was last down 0.2 per cent against the dollar and the euro at $1.377 and €1.18.UK retail sales dropped by 0.2 per cent in September, adding to signs of weakness in the recovery and bucking economists’ expectations of growth.But it was not all doom and gloom, with the latest IHS Markit/CIPS flash composite index for services and manufacturing coming in above expectations.The UK’s private business sector enjoyed its fastest growth in three months, although that was mostly thanks to the services sector, while the manufacturing industry suffered from severe supply chain and jobs shortages.
In company news, Sainsbury’s has ended discussions about selling its banking operation after concluding that approaches it first received in November 2020 did not offer good value for shareholders, the supermarket group has said.
Shares in crisis-hit Evergrande plunged in Hong Kong yesterday after the stock started trading again following a 17-day suspension.
Shares in the Chinese property giant, which is cracking under the weight of a £221billion debt pile, were suspended on 4 October after it said it may have found a buyer for Evergrande Property Services, one of its most profitable businesses.> If you are using our app or a third-party site click here to read Business Live Sainsbury’s sad the offers it had received for its banking arm did not represent good value to shareholders Host commentator Host commentator Host commentator FTSE 250 has closed up 0.06%, or 14.61 points, to 22,931.66 Beyond Meat, the American company behind the eponymous popular vegan burgers, has warned over a larger decline in third quarter sales than expected due to Covid and labour shortages.
Shares in the New York-listed firm fell 13.4 per cent to $ 94.08 after it said it now expects third-quarter net revenue of about $106million, compared with its previous forecast of $120million to $140million.As people go out more, they are stocking up less on vegan burgers and sausages compared with during the pandemic.The company also said new orders from a big distributor did not materialise, while severe weather caused damage to inventory stored at one of its facilities.The red-hot faux meat startup is also facing other challenges including growing competition from Impossible Foods and others, and surging raw material prices.
Just before close, the FTSE 100 was up by 0.32% to 7,212.99.Meanwhile, the FTSE 250 was up just 7.65 points to 22,924.70.
The Dow and the S&P 500 have hit new record highs, but the Nasdaq was pressured after social media giants including Facebook tumbled on Apple privacy tweak worries.The Dow is currently up 0.3 per cent to 35,708, while the S&P 500 is flat at 4,551.The Nasdaq is down 0.5 per cent to 15,145.With half an hour left until market close, the FTSE 100 is up 0.5 per cent at 7,225, while the FTSE 250 is more or less flat at 22,926.Michael Hewson of CMC Markets UK sums up the day: The imminent prospect of an Evergrande default appears to have been deferred for another day, after this morning’s report out of Asia, that it had paid the $83.5m interest payment, which was due for payment by tomorrow.
As a consequence, we look set to finish the week in a much better place than when we started it, when we saw some sharp falls, with the FTSE100 and DAX looking set to consolidate the gains that we saw after last week’s strong gains.A rebound in commodity prices and the deferral of a weekend Evergrande default has helped push the basic resource higher on the day, with the likes of BHP and Rio Tinto rallying on higher gold and copper prices.Shares in gaming firm Guild Esports have tumbled today after the David Beckham-backed company revealed that cash from a sponsor failed to arrive.
It said it had ended a three-year sponsorship deal worth £3.6million with an unnamed European fintech company ‘following delays in the sponsor’s launch and the payment of sums due under the contract’.The deal was first announced in October last year.Shares have fallen 7.5 per cent to 3.98p.Beckham was an early investor in the business and retains a 4.7 per cent stake in the firm.
The company said: Under the terms of the agreement, the sponsor was due to commence payments from the date of their global brand launch and unveiling.To date, Guild has not been given any clear timeline for their launch and none of the amounts scheduled under the contract have been paid.
Given the uncertainty about the contract and the strong appetite from other brands to partner with Guild, the Company has elected to terminate the contract with immediate effect to focus on new sponsorship deals that are at an advanced stage of negotiations.The massive delays and cancelations for flights on Southwest Airlines earlier this month cost the company $75 million, earning reports filed Thursday show.Airline officials blame the loss of revenue on flight cancelations, customer refunds and ‘gestures of goodwill,’ to compensate affected according to CNBC , after it canceled more than 2,000 flights between October 8 and October 13.President Joe Biden wants the House to vote on his multi-trillion infrastructure and social spending plans next week before he leaves for Europe as Democrats remain divided on key issues like family leave and combatting climate change – while still arguing over how to pay for all of it.He has told Democrats he wants a legislative victory ahead of the Group of 20 leaders summit in Rome and the United Nations climate summit in Scotland next week, according to Bloomberg News , so he can show his fellow world leaders that America can still deliver.
Intercontinental Hotels Group, the owner of Holiday Inn, has seen a recovery in business thanks to staycations and a pick up in international global travel.
The group said revenues per available room, the industry’s preferred measure, was up 66 per cent in the three months to the end of September compared with a year earlier.However, this was still 21 per cent down compared with pre-Covid levels.Shares have fallen almost 3 per cent to £ 48.51.
Chief executive of IHG Keith Barr said: Trading continued to improve significantly in the third quarter.Revenues per available room recovered closer towards pre-pandemic levels as more and more guests returned to our hotels around the world.
Domestic leisure demand was particularly strong in a number of markets over the summer, where occupancy and rate climbed back to 2019 levels.Discretionary business travel, group bookings and international trips have also shown increasingly encouraging signs, on top of continuing good levels of essential business demand.London Stock Exchange shares moved 3.5 per cent lower today after the bourse warned investors it expected growth to be weaker in the final quarter of 2021.But LSE reported strong growth for the third quarter of the year, posting a 7.6 per cent rise in income and a 7.3 per cent rise in gross profits to just under £1.6billion.
The FTSE 100 is still in the green – up 0.4%, or 25 points, at 7,216.The FTSE 250 has lost earlier gains and is slightly in the red – down just 13 points to 22,903.The pound has dropped back below $1.38.Arena Events Group, a turnkey events solution provider, was taken out this week in an agreed 21p a share cash offer.
The shares shot up 44 per cent to 20.25p on the bid, which comes from IHC Industrial Holding, an Abu Dhabi-based publicly-listed holding company, and Tasheel, which has an existing stake of 23.9 per cent in Arena.Almost 12 months after first confirming it had received interest in a possible takeover, Sainsbury’s has said it will not sell its banking arm.The supermarket giant had been in advanced talks back in August to sell the division for £200million to American private equity firm Centerbridge Partners, according to reports by Sky News.Ministers today rejected calls to ease immigration rules to bring in more care workers from abroad to tackle a national staffing crisis.
Gillian Keegan, the Care Minister, said ‘hoovering up’ workers from other countries is not the answer to shortages in the sector.America’s wealthiest people are able to avoid billions in taxes by passing huge chunks of their companies to their heirs for free.An analysis by Bloomberg on Knight’s fortune – estimated at $60 billion – discovered that he was able to take advantage of a financial tool called a grantor-retained annuity trust (GRAT).Knight set up nine GRATS, which enabled him to transfer $6.1 billion of Nike shares to loved-ones between 2009 and 2016 – without incurring any tax on them.
Boris Johnson is prepared to water down UK demands for European judges’ role in post-Brexit Northern Ireland to be scrapped, in order to seal a deal with the EU.The Prime Minister has made the arbitration role of the European Court of Justice (ECJ) the new battlefront in the row with Brussels over the Northern Ireland Protocol.Hospitality bosses have warned Boris Johnson that reimposing coronavirus rules this winter would force many pubs, bars and restaurants to ‘go to the wall’.Spiking Covid-19 case numbers have prompted growing fears the Government will soon have to implement its ‘Plan B’ of instructing people to work from home and to wear face masks.The FTSE 100 is in the green today, despite weak retail sales data and the Bank of England’s chief economist warning UK inflation could hit 5 per cent.The UK bluechip index has risen 0.4 per cent to 7,217, with miners topping the list of risers, while the FTSE 250 is up 0.2 per cent at 22,959.AJ Bell financial analyst Danni Hewson commented: The FTSE 100 started in decent fashion on Friday after a week in which the markets have turned downwards, albeit modestly.
The rise in the index reflects its global horizons with the latest news on the UK economy hardly doing much to inspire confidence.An unexpected fall in retail sales, which came despite a boost from rising fuel prices, demonstrating that things are getting tougher out there.
Half-term holidaymakers hoping to get their hands on a cheaper lateral flow test through the Government’s website could be left disappointed – after one billed as costing £14.94 was actually nearly £60 when clicked through.
There had been a big announcement last week how the tests – required for after visiting some other countries – would now be more reasonably priced.Commenting on today’s UK data fuelling debate on the pace of the recovery, Rupert Thompson, Chief Investment Officer at Kingswood, said: Today’s UK data presented a mixed picture on the health of the UK recovery.Retail sales were unexpectedly weak in September, posting their fifth consecutive decline and falling 0.2% over the month.By contrast, business confidence beat expectations in October, with the composite PMI recording a surprise gain and rising to 56.8 from 54.9.These numbers can only add fuel to the debate over the extent of the slowdown in the pace of the recovery.
However, they should have little impact on the Bank of England which seems firmly focused on inflation rather than growth at the moment and looks intent on raising rates either in November or December.UK service businesses saw growth pick up this month, but supply shortages hit factories and cost inflation hit new record highs, according to a new survey.
The latest IHS/Markit Composite PMI for services and manufacturing rose to 56.8 in October, with any readings above 50 indicating growth.Respondents to the survey said there had been a boost in business and consumer spending as customers enjoyed the unwinding of lockdown restrictions.But higher wages and rising costs in global supply chains led to the fastest rate of inflation for goods and services in the private sector since records began in 1998.🇬🇧 Latest flash data for the UK signalled a sharp rise in business activity with the #PMI at a 3-month high (56.8).
The expansion was led by the service sector while severe staff and material shortages weighed on output growth at manufacturers.Read more: https://t.co/EqUm5YEu7D pic.twitter.com/CZUb11I8Um Retail sales dipped for the fifth consecutive month in September as spending patterns continued to normalise and the rising cost of living put pressure on people’s finances, new official figures show.A surge in clothing sales and petrol panic-buying were not enough to lift retail sales, with volumes, or the amount of goods bought from retailers, falling by 0.2 per cent compared to August.Drivers of older cars across Britain will soon have to come to terms with the concept of emissions tax zones in the most polluted cities that could turn vehicle ownership from a convenience to a burden.
Under government orders, councils have been told to curb their air pollution levels – and to do so, they should rid their roads of the dirtiest vehicles.The Bank of England’s new chief economist has warned that inflation could hit 5 per cent in the coming months.Huw Pill said the Bank would face a ‘live decision’ on whether to raise interest rates at its next meeting in November, although he declined to say how he would vote.Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, comments on the latest retail sales figures: There was a September surge in clothing sales, as shoppers back from staycations revamped their wardrobes ready for an Autumn of socialising.With all restrictions on partying dropped, consumers splashed out on styles to go out once again.More staff have hot footed it back to the office after an 18 month break, so it’s likely revamping work wardrobes was also a priority.It will come as a relief for many fashion retailers, particularly those focused on formal and occasion wear, as our penchant for slouching around in leggings and tracksuits had hit hard.In this strive for self-improvement, spending has moved away from home-improvement, with furniture and lighting sales in particular falling off dramatically.
We are clearly fed up with staring at four walls, however beautifully adorned.But the surge in fashion sales weren’t enough to stop an overall drop in retail sales of 0.2% in September.
Shoppers were more cautious, amid a surge in energy costs, with warnings that higher prices are on the way.This is yet another sign that the economic recovery tailed off in September, with confidence ebbing away among consumers.Care homes are closing due to an exodus of staff – leaving NHS hospitals to pick up the pieces, a major report has warned.Today’s annual report by the Care Quality Commission (CQC) paints a bleak picture of a healthcare system on the brink of collapse heading into ‘the most challenging of winters’.The switch to ‘greener’ petrol is fuelling soaring prices at the pumps which could overtake the all-time record within days, the RAC warned yesterday.
It came as the average cost of a litre hit 141.76p, up from 141.35p the previous day and just shy of the 142.43p high set in 2012.
Danni Hewson, AJ Bell financial analyst, comments on the latest retail sales figures covering the month of September: As long summer nights slipped into autumn, people seem to have slipped back into another pandemic habit – to cook and eat at their own tables.Food sales have ticked back up again, possibly in response to rising prices which will leave less money for that discretionary spend.And those crazy days when motorists queued for hours just to get a few quid’s worth of fuel in their tanks did have the expected impact on fuel sales.Whilst sales over the month were up, garages didn’t make out like the bandits some headlines would have painted them.Turnover was subdued during the early weeks of the month; you can’t sell what you don’t have, but it picked up as supply returned to normal and nervous drivers made sure they kept tanks full just in case there was any return to earlier madness.Overall, the slight dip in sales might not seem too concerning, but there are questions about whether the downward trend will continue because of price pressures and a consumer nervous about their budget.Barclays bankers are set for bumper bonuses as a surge in takeover activity sparks a fees bonanza in the City.The bank posted profits of £6.9billion for the first nine months of the year – a record high and up 187.5 per cent on the same period in 2020.
Third quarter profits alone hit £2billion, 20 per cent ahead of expectations.Unilever’s boss said it was ‘far from business as usual’ as he warned over rising prices, supply issues and ongoing coronavirus lockdowns.Highlighting ‘unprecedented cost inflation’, the FTSE 100 consumer goods giant’s chief executive Alan Jope said ‘the operating environment across our markets worldwide remains volatile’.Tesla shares raced to record highs on Wall Street as investors cheered bumper results.
The electric car maker climbed 3.3 per cent, or $28.20 to $894, giving it a market cap of around £642billion.Savers are piling billions into the stock market and other investments as they try to protect savings built up during the Covid lockdowns from rising inflation.Investment platform AJ Bell and wealth manager St James’s Place (SJP) both said they have taken in huge sums of money over the past year.Tax hikes are making Britain less competitive and holding back the economy, the Chancellor has been warned.
As Rishi Sunak prepares for next week’s Budget and Spending Review, a report by the Centre for Policy Studies shows the UK is sliding down the global rankings for competitive taxes.Shares in crisis-hit Evergrande plunged in Hong Kong after the stock started trading again following a 17-day suspension.Shares in the Chinese property giant, which is cracking under the weight of a £221billion debt pile, were suspended on 4 October after it said it may have found a buyer for Evergrande Property Services, one of its most profitable businesses..