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FTSE 100 Live: Index closes down 1.3% as Diageo tumbles, GDP flat in third quarter

FTSE 100 live (Evening Standard)
FTSE 100 live (Evening Standard)

Shares in FTSE 100 heavyweight Diageo have tumbled after it cut guidance due to lower-than-expected demand in Latin America and the Caribbean.

In a surprise update, the Smirnoff and Johnnie Walker drinks giant said its current half-year sales performance will be down on the previous six months.

The update added to the downbeat mood for the London market after Federal Reserve chair Jerome Powell said he could not rule out further US interest rate rises.

FTSE 100 Live Friday

  • NatWest cancels £7.6m of Alison Rose payoff

  • Diageo cuts guidance amid LatAm weakness

  • Shares fall after US interest rates warning

FTSE 100 closes at 7,360.55

Friday 10 November 2023 16:38 , Daniel O'Boyle

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The FTSE 100 finished the day down almost 100 points, or 1.3%, at 7,360.55 with Diageo leading the fallers.

The index hit as low as 7322 at one point, before a minor rally late in the day. That leaves it down 0.8% for the week.

Diageo ended up down 12.2% at 2,850p, having lost as much as 16% in the morning. Other big fallers included Ocado and Fresnillo.

A truncated risers board was led by defence giant BAE.

'Environmental crimes': Thames Water pumps 72bn litres of sewage into Thames since 2020

Friday 10 November 2023 15:00 , Daniel O'Boyle

Thames Water has committed "environmental crimes" by dumping at least 72 billion litres of sewage into the River Thames since 2020, new figures reveal.

Last year alone at least 14.3 billion litres of sewage were discharged into the river and 32 billion in 2021 - making it the worst year on record for sewage discharges into the Thames.

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Modgen near Twickenham was the worst hit, with 17.1 billion litres being discharged there since 2020, an environmental information request submitted by the Liberal Democrats has revealed.

On one day in January 2021, Thames Water discharged almost one billion litres of sewage at the Modgen site.

Read more here

US shares to rise

Friday 10 November 2023 14:15 , Daniel O'Boyle

Wall Street shares are set to rise when US markets open this morning, despite fears over the Fed’s rates outlook.

S&P 500 futures are up by 0.4% to 4,381.50, while Dow Jones and Nasdaq futures are up by the same amount, to 34,082.00 and 15,315.75, respectively.

However, marketing tech firm Trade Desk is in for a big fall, down 23% in premarket trading.

Billionaire Reuben brothers-financed London office in default

Friday 10 November 2023 13:20 , Daniel O'Boyle

A London office project that included plans for a 1.4 acre urban rooftop forest has been placed under receivership after defaulting on a loan from the billionaire Reuben Brothers.

A receiver has been appointed to the company behind Roots in the Sky, the proposed redevelopment of Blackfriars Crown Court in London’s Southwark district, according to a filing. A company controlled by Fabrix Capital acquired the property in February 2020 and planned to redevelop it into a 430,000 square feet (39,948 square meters) office.

Rising interest rates have roiled commercial real estate, crimping valuations and pushing up landlords’ relative indebtedness, causing some to default. It has been particularly brutal for developers who have also had to contend with soaring construction costs and uncertainty over future demand.

Fabrix acquired the site just before Britain’s first coronavirus lockdown, a time when competition for projects was fierce. The company paid over £64 million ($78 million) for the vacant buildings, filings show. The properties were originally put up for sale by HM Courts and Tribunals Service for £45 million, EG reported in March 2019.

Read more here

London City Airport boss quits to become CEO of HS1

Friday 10 November 2023 13:05 , Daniel O'Boyle

London City Airport boss Robert Sinclair is to swap planes for trains, having been named as the new CEO of the HS1 rail line between St. Pancras and the Channel Tunnel.

Sinclair will become HS1’s boss in March, replacing Dyan Perry, who is set to retire. He will be tasked with attracting more international travellers to the UK on what is currently the country’s only high-speed rail line.

The New Zealander joined City Airport in 2017, leading it through the pandemic era when global air travel collapsed.

Read more here

City Comment: No boom or bust, we’re just bumping along at the bottom

Friday 10 November 2023 12:20 , Daniel O'Boyle

“No more boom and bust” promised Gordon Brown during the glory days — economically speaking — of the late Nineties and early Noughties.

Well sadly it did not come to pass and no sooner was he out of 11 Downing Street and into No 10 than the world financial system suffered its near death experience. A bust certainly followed.

What we have now is actually quite rare. An economy that is neither growing nor contracting but just bumping along the bottom.

GDP flatlined in the third quarter and stubbornly refused to fall into recession despite the fears expressed by Jeremy Hunt after the mini-Budget last year.

Read more here

FTSE falls further as Diageo continues to tumble

Friday 10 November 2023 11:17 , Simon Hunt

Three hours into the day's trading session in London, the FTSE 100 has fallen further, now down by more than 1%, after Diageo's stock sunk 16%, its biggest one-day decline since 1988.

Here's a look at the latest markets data:

Central London office lettings in line to meet new post-Covid 'normal' annual volume

Friday 10 November 2023 11:14 , Daniel O'Boyle

Central London office lettings are forecast to hit around 8.5 million sq ft this year, well below pre-2020 figures but pointing towards a new post-Covid 'normal', according to latest research.

Property consultancy Cushman & Wakefield said if its 2023 estimate is met that would put the performance in line with 2021 figures, although it is lower than last year when companies were catching up on deals following pandemic disruption.

The number is also under the 11.6 million sq ft and 12.5m sq ft agreed in 2019 and 2018 respectively.

In the third quarter just done, deals for high quality grade-A space have been dominant and total take-up was 14% ahead of the five-year quarterly average.

Read more here

London City Airport boss quits to become CEO of HS1

Friday 10 November 2023 10:24 , Daniel O'Boyle

London City Airport boss Robert Sinclair is to swap planes for trains, having been named as the new CEO of the HS1 rail line between St. Pancras and the Channel Tunnel.

Sinclair will become HS1’s boss in March, replacing Dyan Perry, who is set to retire. He will be tasked with attracting more international travellers to the UK on what is currently the country’s only high-speed rail line.

The New Zealander joined City Airport in 2017, leading it through the pandemic era when global air travel collapsed.

Sinclair said: “I am delighted to be appointed as the new CEO of HS1. This is an incredibly exciting opportunity to lead Britain’s only high-speed railway at a time when more and more people are looking to travel between London and destinations across Europe using the high-speed rail network

“I am looking forward to working with the excellent team at HS1, along with train operators, business partners and stakeholders to grow high-speed rail services, provide more choice for passengers and build on HS1’s great work to further improve the customer experience.”

Read more here

FTSE 250 down more than 2% in risk-averse mood. Ocado falls 6%

Friday 10 November 2023 10:19 , Graeme Evans

European shares are struggling, with the FTSE 100 index off 68.82 points to 7386.85 after the Diageo warning and message from Federal Reserve chair Jerome Powell that interest rate rises may not be over.

The FTSE 250 index slumped more than 2% or 388.04 points to 17,649.81, giving back some of the recovery from October's year-low of 16,764.

Casualties of the risk averse mood included car maker Aston Martin Lagonda, which fell 4% or 9.4p to 201p, and US-focused publisher Future with a decline of 33p to 887p.

There was also an abrupt end to the recovery for grocery warehouse technology business Ocado as shares retreated 6% or 35.2p to 509.8p.

Asia-based stocks suffered after Burberry lost 42.5p to 1677p and Prudential fell 16.4p to 885.8p, while mining giant Anglo American eased 51p at 2025p.

A recovery for Brent Crude to $81 a barrel meant shares in BP and Shell offered some support, as did defensive plays including BAE Systems.

A shortened blue-chip risers board included Smith & Nephew, up 3.1p to 1000.5p after Goldman Sachs gave the medical devices firm a 'buy' rating and target of 1400p.

NatWest cancels £7.6m of Alison Rose payoff — but she still gets £1.7m

Friday 10 November 2023 09:59 , Daniel O'Boyle

NatWest will cancel £7.6 million worth of bonuses for its former boss Dame Alison Rose, but she will still be paid £1.7 million after her exit in the wake of the controversy over the closure of Nigel Farage’s bank account.

Rose quit earlier this year after it was revealed that she had been the source for a BBC report, which the broadcaster later acknowledged was inaccurate, about the closure of Nigel Farage’s account with Coutts bank, owned by NatWest. The report claimed that the closure was purely based on financial factors, but Farage later produced a dossier showing that Coutts’ reputational risk management team had collected information about his political positions.

NatWest said that “good leaver status” was not applicable to Rose because of the manner of her exit. As a result, it said she was not eligible for £4.7 million worth of share awards.

Another £2.8 million of bonuses and variable pay for this year has also been cancelled, bringing the total to £7.6 million.

Read more here

Time may be up for luxury boom as Richemont growth slows

Friday 10 November 2023 09:23 , Daniel O'Boyle

Signs emerged today that the post-pandemic luxury goods boom may be coming to an end, as sales growth slowed at Richemont, the Swiss business behind brands such as Cartier, Vacheron Constantin and Alfred Dunhill.

Sales of high-end clothes and accessories soared in the past year, fuelled in part by pent-up demand among wealthy Asian shoppers as countries such as China loosened their Covid restrictions.

Today, Richemont revealed that while sales were still climbing, crossing the €10 billion mark for the six months to 30 September, growth had slowed to 5% over the summer, compared to 19% in the three months to 30 June. While jewellery continued to grow, sales of watches declined, though Richemont noted that its highest-end watch brands like Vacheron, which makes timepieces that sell for six-figure sums, performed better.

Victoria Scholar, head of investment at interactive investor said: “Luxury was a market winner at the start of the year, but the sector’s glow is now fading as even the aspirational, higher end customers feel the squeeze with spending on the decline as belts tighten.”

 (Vacheron Constantin)
(Vacheron Constantin)

Diageo leads weaker FTSE 100, Redrow down 6% as mid-caps slump

Friday 10 November 2023 08:48 , Graeme Evans

Diageo shares have slumped 11% or 351p to 2894p, taking the FTSE 100 stalwart back to levels last seen at the end of 2020.

The drinks company’s warning over weaker demand in Latin America contributed to a weak session for the FTSE 100 index, which fell 35.38 points to 7420.29.

Other big fallers included Ocado, Burberry and mining giant Anglo American after Federal Reserve chair Jerome Powell warned there is no certainty interest rate rises are over.

The FTSE 100 impact was limited by an improved session for oil giants BP and Shell, while Smith & Nephew rose 7.6p to 1005p after analysts at Goldman Sachs gave the medical devices firm a 'buy' recommendation and price target of 1400p.

The downbeat mood was more evident in the FTSE 250 index, which slumped by 2.4% or 437.81 points to 7600.04.

Big fallers included the housebuilder Redrow, which lost 6% or or 31.4p to 488.6p after warning that autumn’s subdued trading conditions meant results will be towards the lower end of its forecast range.

FTSE 250 down 2%

Friday 10 November 2023 08:19 , Simon Hunt

A few minutes into the day's trading session, the FTSE 250 is down almost 2%.

Here's a look at your key market data:

Diageo guidance cut triggers drinks selloff

Friday 10 November 2023 08:12 , Simon Hunt

Diageo's surprise guidance cut appears to have triggered a big drinks selloff this morning.

Shares in Diageo are down more than 8%, while Pernod Ricard shares fell 2.8% and Remy Cointreau stock fell by 3.4%,

Johnnie Walker and Smirnoff owner Diageo had expected to see a gradual improvement in organic net sales growth but now says operating profit growth for the first half of 2024 will decline compared to the first half of 2023.

"Spectre of recession" remains

Friday 10 November 2023 08:01 , Daniel O'Boyle

Thomas Pugh, economist at leading audit, tax and consulting firm RSM UK, said the “spectre of recession” remains, even as the possibility of a technical recession is pushed back at least as far as 2024.

“The economy avoided contracting by the skin of its teeth in Q3 and we expect return to growth in Q4 as a sharp fall in inflation, strong wage growth and government transfers to low-income households give consumer spending a boost,” he said. “That means the economy will have avoided recession for another year. However, the big picture is still one of a stagnating economy.

“We doubt growth will materially pick up until towards the end of next year, meaning that the spectre of recession will hang over the UK economy for a long time yet.”

Can the economy continue to avoid a decline?

Friday 10 November 2023 07:54 , Daniel O'Boyle

George Lagarias, Chief Economist at Mazars, warned that the slight uptick in GDP in September, growing 0.2% for the month, may not be sustainable.

He said that much of it was powered by sectors that may suggest deeper underlying problems with the economy.

“Economic activity in the UK surprised on the upside. A deeper look at the numbers tells as much a story of economic resilience, as one of economic stress,” Lagarias said. While headline GDP rose 0.2%, this was mainly driven by two factors: professional and healthcare services.

“On the one hand, companies increasingly find themselves in need of professional advice to navigate this difficult environment. This may lift up GDP for now, but it can’t be a sustainable driver of the economy.

“On the other hand, consumer-facing services continued to contract in line with the retail data we saw last month. The data is, to say the least, unidirectional.

“Persistent weakness in consumption suggests that this economic rebound may be temporary. The question we are faced with is: are consumers holding back for better deals, or because of high heating bills?

“With Black Friday, Cyber Monday and the festive season ahead of us, we will soon know.”

Warpaint ups guidance after strong Autumn

Friday 10 November 2023 07:50 , Daniel O'Boyle

Cosmetics company Warpaint upped its full-year guidance today after strong Autumn trading.

Sales are now expected to be £85 million, compared to £64 million last year, while profits are set to double to £16 million.

The cosmetics business, which owns the W7 brand, is set to launch in a further 102 Boots stores in the UK and 372 CVS stores in the US early next year.

Warpaint shares have already soared by almost 80% this year and arelikely to climb further when markets open.

'Subdued' housing market to keep Redrow profits at low end of forecasts

Friday 10 November 2023 07:45 , Michael Hunter

Redrow, the FTSE 250 house builder, warned today that its annual profit would be at the lower end of expectations.

It said the housing market was "more subdued" than it expected in the autumn after "the usual summer slowdown".

Net private reservations in the first 18 weeks of its financial year ending in 2024 were down a quarter at £384 million and the turnover of homes was down 30%.

It stood by its existing range of profit forecasts, of between £180 million and £200 million from revenue of between £1.65 billion and £1.7 billion, but "they are more likely to be towards the lower end of the range."

Richard Akers, Redrow's chairman, said:

"The business has had to adapt to this more difficult trading environment in terms of build rate and operating costs."

Flatlining economy "not weak enough" to bring prices under control

Friday 10 November 2023 07:33 , Daniel O'Boyle

Paul Dales, chief UK economist at Capital Economics, said that while the UK economy is flatlining, it is still not weak enough to bring price growth back to earth any time soon.

“The Q3 GDP figures will spark a big debate about whether or not the economy is in recession (the published growth rate was 0.0%, but GDP actually declined by 0.02% or £173m), but the key point is that the economy is not weak enough to reduce core inflation and wage growth quickly,” he said. “As such, we don’t expect the Bank of England will be able to cut interest rates until late in 2024 rather than in mid-2024 as widely expected.

“The recent relative resilience of the economy has continued with the 0.2% m/m rise in real GDP in September and the 0.0% q/q Q3 figure both beating the consensus forecasts of -0.1% m/m and -0.1% q/q respectively

“The breakdown of Q3 GDP, however, suggests that the drag from higher interest rates is growing.”

Diageo cuts 2024 guidance

Friday 10 November 2023 07:15 , Simon Hunt

Diageo has cut its 2024 guidance as the London-based spirits maker cites weaker demand in Latin America.

The Johnnie Walker and Smirnoff owner had expected to see a gradual improvement in organic net sales growth but now say operating profit growth for the first half of the year will decline compared to the first half of 2023.

"Macroeconomic pressures in the region are resulting in lower consumption and consumer downtrading," Diageo said.

"These impacts are slowing down progress in reducing channel inventory to appropriate levels for the current environment."

(PA)
(PA)

Wall Street run ends after Fed comments, FTSE 100 seen lower

Friday 10 November 2023 07:13 , Graeme Evans

The strong run for US stock markets ended last night after Federal Reserve chair Jerome Powell declined to say interest rates are sufficiently high.

He said policymakers are encouraged by the slowing pace of inflation but unsure they've done enough to reach their ultimate goal of 2%.

"If it becomes appropriate to tighten policy further, we will not hesitate to do so," Powell told an IMF conference in Washington.

The S&P 500 index ended an eight day winning streak to close 0.8% lower, while the Nasdaq Composite lost 0.9% after nine sessions higher.

The US selling impacted Asia trading to leave the Hang Seng index down 1.4%. The FTSE 100 index added 53.95 points in yesterday’s session but is forecast by IG Index to open today’s session down 0.6% at 7412.

Brent Crude futures remain near to $80 a barrel after a big decline for the oil benchmark earlier in the week.

UK GDP flat in Q3

Friday 10 November 2023 07:06 , Daniel O'Boyle

UK GDP was unchanged in the third quarter, meaning the country will avoid a technical recession this year.

A recession is typically defined by two consecutive quarters of negative GDP, which economists have warned could still be on the cards later.

ONS Director of Economic Statistics Darren Morgan said: “The economy is estimated to have shown no growth in the third quarter. Services dropped a little with falls in health, management consultancy and commercial property rentals. These were partially offset by growth in engineering, car sales and machinery leasing.

“There were also small growths in manufacturing, led by cars and metal products, while construction grew due to new commercial property work.

“In the month of September the economy grew slightly, with increases in film production, health and education. This growth was partially offset by falls in retail and computer programming.”

Recap: Yesterday's top stories

Thursday 9 November 2023 23:12 , Simon Hunt

Good morning. Here's a summary of our top headlines from yesterday: