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FTSE 100 Live 17: Pound near $1.19 as Hunt outlines Autumn Statement


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Pound just under $1.19, London stocks lower and government debt yields around 3% into fiscal statement

Here’s a snapshot of the current trading across the UK’s major financial assets as the wait for detail on Chancellor Jeremy Hunt’s hotly anticipated, redrawn tax and spending plans enters its final minutes.

From the government’s plans for its energy support plan after April, to independent forecasts on the economy from the Office of Budget Responsibility, there are a host of factors that could move markets. While Hunt is seen as a safe pair of hands after the chaos sparked by the previous “mini”-Budget, investors will be keeping close watch on Westminster.

In the meantime:

FX: The pound is down 0.4% at $1.861Stocks: FTSE 100 is down 0.6% at 7309.30Stocks: FTSE 250 is down 0.4% at 19044.92Gilts: The yield on benchmark 10-year government bonds is at 3.181%Gilts: The yield on 5-year government bonds is at 3.209%1668680841

Drop in London property valuations hits Great Portland Estates

Great Portland Estates, one of central London’s major landlords, took a hit today from the revaluation of its property portfolio after a turbulent time for the City and the West End.

The FTSE 250 company reported a loss of almost £87 million and acknowledged that property values are under pressure. But it was upbeat on its prospects and the capital’s ability to get through the looming recession.

Toby Courtauld, Chief Executive, said: “Whilst economic challenges may persist in the near term, our experience is that many customers are looking through the downturn in assessing their real estate needs, seeking to trade up to great spaces that are fit for future working patterns.”

The company is entirely focused on central London and has always highlighted the cyclical nature of its business. Courtauld pointed to its “plan to deliver our £1.1 billion capex programme into this shortage and a recovering economy”.

GPE’s shares fell 18p to 526p, a slip of just over 3%.

read more here

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Mitie shares up 8%, Ocado leads FTSE 100 lower

Reassurance from outsourcer Mitie that it is more than filling the gap left by the end of profitable Covid contracts helped to trigger a surge for its shares today.

The FTSE 250 company, which employs 68,000 people in facilities management and other services, cheered investors with better-than-expected half-year results and improved guidance for an annual operating profit of at least £145 million.

It said contract wins, acquisitions and price inflation meant it had more than replaced the short-term boost from Covid work such as testing centres and quarantine services.

Mitie’s new contracts include the Dungavel and Derwentside immigration removal centres, which helped care and custody revenues to improve 32% on a year earlier.

Shares rose 8% or 6.2p to 80.5p and left Mitie up more than 20% this year, although analysts at Jefferies today highlighted a target price of 99p.

The performance by Mitie, which is handing £10 million to staff through a winter support package, failed to prevent the FTSE 250 index falling 71.89 points to 19,040.51.

The FTSE 100 index drifted 38.51 points to 7321.68, with Spirax-Sarco Engineering among the fallers despite the thermal energy specialist leaving guidance unchanged.

It fell 4% or 550p to 11,035p, while Ocado surrendered more of its recent gains by dropping back 5% or 37p to 689p.

Gaming firm Flutter Entertainment fell 100p to 11,190p after hosting an event in New York to showcase US business FanDuel.

The operation, which has a 42% share of US online sports betting and 18% in iGaming, is on course for profitability in 2023 and is seen by Flutter boss Peter Jackson as an enormous value creation opportunity

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Return of tourists boosts sales at Fuller’s pubs

Tourists and commuters flocking back to the capital have provided a much-needed sales boost at pub chain Fuller’s, the firm said today.

The Chiswick-based business, which runs The Banker in Cannon Street and The Counting House in Cornhill, said Central London and City sites have seen revenues rise by 20% against the prior year, despite the impact of tube and train strikes.

It reported turnover of £169 million in the six months to September, up 45% on 2021, while pre-tax profits grew 36% to £10 million.

Fuller’s boss Simon Emeny said: “We’re very optimistic about London reaching a full recovery.

“People are coming back to offices and Fridays are actually an encouraging period, probably the last piece to get back to normality.”

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FTSE 100 struggles, Mitie surges 7% on upgrade

London’s top two benchmarks are lagging the rest of Europe as investors await developments in the Chancellor‘s autumn statement.

The FTSE 100 index stands 6.16 points lower at 7345.03 and the FTSE 250 index is 22.16 points higher at 19,134.56, compared with a 0.9% rise on the Frankfurt exchange after sentiment was boosted by better-than-expected figures from Siemens.

Fire safety business Halma and steam management specialist Spirax-Sarco Engineering were among the biggest blue-chip fallers, losing around 2% after their respective updates.

Grocery technology business Ocado also surrendered more of its recent gains by dropping 2% or 16.8p to 709.2p.

The FTSE 250 index was led by outsourcing firm Mitie, which rose 7% or 4.9p to 79.2p after it increased its full-year operating profit guidance to at least £145 million.

The company, which employs 68,000 people, said contract wins, acquisitions and pricing have more than replaced the short-term revenue boost from Covid-related business.

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Royal Mail owner in red amid strike action

Royal Mail owner International Distributions Services has slumped to a half-year loss of £127 million and reiterated that the postal service will be up to £450 million in the red for the full year.

Revenues for the strike-hit Royal Mail division fell 10.5% to £3.6 billion in the six months to 25 September, leading to an operating loss of £219 million. In contrast, the European logistics division GLS racked up a profit of £162 million.

Chairman Keith Williams said: “The difference between the performances of our two companies could not be more stark.

“GLS has adapted well to inflationary pressures across its geographies. However, we have been standing at a crossroads with CWU in the UK for several months.”

Talks with CWU are continuing but Williams said the company was moving ahead with required changes to rightsize Royal Mail and ensure it has a sustainable future.

The £350m-£450m forecast loss for Royal Mail is based on the direct impact of 12 days of industrial action which have taken place or have been notified to the company.

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Chancellor set to target £50bn+ fiscal tightening

Chancellor Jeremy Hunt has admitted that getting the public finances back in order has required some ‘eye-watering’ decisions.

These have been set against a backdrop of an continuing energy price shock, soaring interest costs and a deteriorating global economy.

Projections from the Office for Budget Responsibility are set to show a deep and protracted recession in 2023 with growth subdued until 2025 at the earliest.

It is expected that Hunt will target between £50 billion and £60 billion of fiscal consolidation in his statement today.

This will come from stealth taxes as well as higher windfall taxes on the energy industry plus a budget freeze for government departments.

Capital Economics said: “We suspect the autumn statement will probably have to incorporate tightening measures worth £54 bilion but that he’ll tilt the balance to tax hikes and have most policies starting later rather than sooner.”

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Hell for leather: Burberry plans to ramp up turnover to £4 billion by doubling sales of leather products

Luxury brand Burberry has brushed off macroeconomic uncertainty, setting a new target of growing sales to £4 billion in the medium term.

The retailer hopes to achieve this by doubling sales of leather goods and shoes and make accessories worth more than 50% of total sales in the long term.

It reported revenue of £1.3 billion in the 6 months to 1 October, up 11%, while operating profit grew 27% to £263 million.

Charlie Huggins, Head of Equities at Wealth Club, said: “Burberry’s new chief executive, Jonathan Akeroyd, faces a mammoth task to turn around the struggling luxury fashion house.

“The group’s performance has been disappointing for many years. Growth and margins have significantly lagged that of rivals like LVMH, and much more still needs to be done to revitalise and elevate the brand. A new CEO and creative designer could be just the tonic Burberry needs.

“Make no mistake – Burberry has promise. Its brand still carries weight in the world of luxury fashion. But to challenge the likes of LVMH, some tough choices will need to be made, especially around new products. The culture probably also needs reinvigorating – with an injection of much-needed dynamism not going amiss.”

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