- FTSE 100 down 13 factors at 7,362
- Barclays decrease after blended results, cuts UK steerage
- CAB Payments share plummet, cuts steerage
10:45am: Kingfisher faces weaker French demand, competitors menace
The FTSE 100 continues to rally from earlier lows, now down 13 factors, at 7,362.
Banks stay a drag with Barclays, Lloyds and NatWest all decrease but mining shares and utilities are offering help.
One share within the pink although is DIY retailer, Kingfisher, the proprietor of B&Q, Castorama, Brico Dépôt, Screwfix and TradePoint.
Shares are 1.9% decrease after downbeat feedback from JPMorgan.
It thinks consensus monetary 2025 forecasts for each the UK and France are over formidable – it’s round 10% under consensus – significantly with the latter seeing indicators of a weakening client.
It has reiterated an underweight ranking and positioned the inventory on adverse catalyst watch forward of the third quarter buying and selling replace on November 22.
JPM identified a September 2023 survey results present a major worsening within the outlook for French DIY spend with the web steadiness falling to -22% whereas latest revenue warnings in France may sign a weakening client.
Longer mortgages in France present some safety in a rising charges surroundings, but housing begins and new mortgages have however materially deteriorated, now 29% and 43% under pre-pandemic ranges, the financial institution identified.
JPM reckons softening client demand might be exacerbated if key competitor, Leroy Merlin, expands its more and more promotional stance from Poland into France.
10:21am: PMI in line with fall in GDP
Ruth Gregory at Capital Economics saiddespite edging greater the PMI is at a stage that, traditionally, has been in line with a contraction in actual GDP.
“This supports our view that a mild recession is underway and that the Bank of England has finished hiking interest rates,” she mentioned.
The rise within the flash composite PMI was a bit weaker than anticipated with the development solely attributable to an increase within the manufacturing output steadiness.
While this implies the manufacturing sector could also be over the worst it’s nonetheless in line with precise manufacturing output falling by round 1-2% 1 / 4.
“Overall, neither October’s PMIs nor today’s labour activity release contained anything too concerning for the Bank of England.,” she felt.
“That gives us more confidence in our view that the Bank will keep rates on hold at 5.25% again next week.”
9:59am: Unemployment charge rises to 4.2%
The UK labour market has held up barely higher than thought as greater rates of interest weigh on financial exercise, in accordance with figures from the Office for National Statistics.
The ONS mentioned the unemployment charge rose to 4.2% within the three months to August, up from 4% within the earlier quarter.
The new adjusted Labour Market knowledge revealed at this time present:
️▪️ employment was 75.7%
▪️ unemployment was 4.2%
▪️ financial inactivity was 20.9%
— Office for National Statistics (ONS) (@ONS) October 24, 2023
The employment charge fell 0.3 proportion factors to 75.7% in the identical interval.
These estimates must be handled as “experimental”, the ONS mentioned, as they have been for the primary time derived from tax data and advantages claims, moderately than the labour power survey on which its figures are normally primarily based.
The statistics company was unable to publish the standard figures due to worsening issues with its survey.
9:50am: UK skirting with recession as enterprise exercise falls
Business exercise decreased once more throughout the UK personal sector throughout October with decrease output seen in each the manufacturing and repair sectors.
At 48.6 in October, the headline seasonally adjusted S&P Global/CIPS Flash UK composite output index was up fractionally from 48.5 in September but under the 50.0 no-change mark for the third month operating.
The newest studying signalled a modest discount in personal sector output, which contrasted with an upward development on common in the course of the first half of 2023.
UK enterprise exercise continued to say no in October, @SPGlobal @cipsnews #UK Flash #PMI knowledge confirmed, with the PMI at 48.6 (Sep: 48.5) amid additional contractions in each companies and manufacturing. Read extra: https://t.co/PDwenfNa4I pic.twitter.com/QhkHZlH0Ve
— S&P Global PMI™ (@SPGlobalPMI) October 24, 2023
Chris Williamson, chief enterprise economist at S&P Global Market Intelligence mentioned: “The UK economy continued to skirt with recession in October, as the increased cost of living, higher interest rates and falling exports were widely blamed on a third month of falling output.”
“The overall pace of decline remains only modest, signalling a mere 0.1% quarterly rate of GDP decline, but gloom about the outlook has intensified in the uncertain economic climate, boding ill for output in the coming months. A recession, albeit only mild at present, cannot be ruled out,” he added.
The flash UK companies PMI enterprise exercise index fell to 49.2 in October from 49.3 in September, hitting a 9-month low whereas the flash UK manufacturing PMI rose to 45.2 from 44.3, a 3-month excessive.
Service suppliers reported subdued client confidence, the affect of elevated borrowing prices, and weak shopper demand throughout the true property sector.
9:38am: CAB “dead money” till confidence rebuilt
The warning from CAB has rompted some scathing phrases from Liberum.
Analysts mentioned the administration’s repute “is in tatters.”
“While we think the underlying business has a strong proposition with a large market, management’s inability to foresee events and guide is a major concern,” it mentioned.
It estimates forecasts can be reduce materially with 35-40% off consensus Ebitda for monetary 2023.
“The stock will likely be dead money until confidence is rebuilt,” it mentioned.
Shares within the fintech floated in July to a lot fanfare so this warning will likely immediate some questions from traders.
9:28am: CAB plummets after warning
Shares in CAB Payments have plummeted greater than 50% after it warned income could be 17% under earlier steerage.
The agency mentioned in latest weeks it has seen a lot of modifications to the market circumstances in a few of its key foreign money corridors, on high of the continuing uncertainties surrounding the Naira, that are impacting each volumes and margins; most notably, the Central African franc and West African franc.
At the current time, these market circumstances are compressing margins and decreasing buying and selling quantity.
These challenges are latest but persevering with, and coincide with the historically robust fourth quarter, it mentioned, whereas it’s unclear when and to what extent circumstances in these markets could enhance.
CAB now expects group income for 2023 to be at the very least 20% forward of the prior 12 months but round 17% under beforehand issued steerage.
9:04am: Reduced UK expectations weigh on Barclays regardless of revenue beat
It was a blended bag from Barclays but the City has marked the excessive road lender down with shares off round 6%.
Profit got here in forward of forecast attributable to a stronger than anticipated efficiency in its bank card arm, and decrease than anticipated provisions but the lender additionally diminished its steerage for internet curiosity margin within the UK.
Shore Capital’s Gary Greenwood described it as “a low-quality earnings beat primarily due to a better than expected impairment charge.”
He defined pre-tax revenue of £1.89 billion was forward of the £1.77 billion consensus reflecting optimistic variances on impairments (+£137 million), litigation and conduct costs (+£62 million) and different internet revenue (+£1 million), partly offset by adverse variances on complete revenue (-£34 million) and working prices (-£47 million).
But he famous UK internet curiosity margin steerage has been moderated to between 3.05-3.10% from round 3.15% beforehand given modifications to deposit pricing and blend.
But given Barclays UK internet curiosity revenue accounts for round one quarter of complete group revenue – decrease than for its home UK friends – the affect of this modification on total Group revenue can be comparatively small, he thinks.
He expects forecasts to edge decrease.
He charges Barclays ‘buy’ and thinks it’s the “most undervalued of the mainstream UK banks that we cover.”
Over at Jefferies, analysts don’t consider the UK NIM information essentially implies downgrades to revenue forecasts given 10 foundation factors of UK NIM is value round £200 million but bank card income is annualising £284 million forward of consensus within the quarter.
It identified EPS was 12% forward of market expectations as card income and credit score prices are available in higher than anticipated.
Jefferies retains Barclays at purchase.
Richard Hunter at interactive investor mentioned: “As ever, Barclays is spinning many plates and largely reaping the reward of its geographical and business diversity.”
“The lower NIM guidance in particular has been received extremely poorly by investors, whereas the drop in CIB income was largely expected given the recent experience of US banks.”
8:47am: Miners up, banks down
It’s a two-way pull in London with miners within the inexperienced and banks within the pink leaving the FTSE 100 broadly unchanged.
Banks stay unfavoured with Barclays down over 8% after its results at this time with Lloyds Banking Group PLC (LSE:LLOY) down 2.3% and NatWest down 3.5%.
John Moore, senior funding supervisor at RBC Brewin Dolphin, mentioned: “Despite beating expectations at a headline level, underneath it’s a real mixed set of results for Barclays, reflecting an increasingly challenging backdrop.”
But mining corporations are faring higher with Rio Tinto up 2.4%, Antofagasta up 2.0% and Anglo American up 1.5%.
Barclays has taken a extra optimistic view of Rio Tinto, upgrading to obese from equal weight, after a go to to China.
This confirmed metal and iron ore demand was extra resilient than it thought.
Over within the FTSE 250, CAB Payments Holdings has plunged 57% after a buying and selling replace – we’ll have extra on this because the morning progresses.
8:15am: FTSE held again by weak banks after Barclays results
The FTSE 100 opened decrease weighed down by falls within the banking sector after blended results from excessive road lender, Barclays.
At 8:15am, London’s lead index was down 3.78 factors at 7,371.05 whereas the FTSE 250 rose 28.03 factors, 0.2%, at 17,087.02.
Barclays reported better-than-expected earnings within the third quarter but lowered UK internet curiosity margin steerage and flagged a cost within the fourth quarter attributable to restructuring.
Shore Capital’s Gary Greenwood described it as “a low-quality earnings beat primarily due to a better than expected impairment charge.”
He famous internet curiosity margin steerage was downgraded once more, given deposit pricing and blend modifications, which may present adverse learn throughout elsewhere.
Matt Britzman, fairness analyst at Hargreaves Lansdown described it as “a mixed quarter for Barclays.”
“Higher rates are still providing a healthy tailwind, more than offsetting the impact of a weaker mortgage market and a shift in deposit levels.”
“But it well and truly looks like net interest margin has peaked for the UK arm, with full-year guidance pulled lower.”
Shares in Barclays fell 6.6% dragging Lloyds and NatWest down by 3.0% and 2.6% respectively.
Bunzl was one other share within the pink, down 4.1%, after it reported a fall in third quarter gross sales though it held steerage.
In the inexperienced was Rio Tinto, up 2.1%, after Barclays upgraded to obese from equal weight.
7:58am: Bunzl backs steerage regardless of gross sales fall
We’e had a buying and selling replace from Bunzl PLC as effectively which reported income fell 8.8% within the third quarter as gross sales of Covid-related merchandise continued to drop and it took a hit from the weak point of the pound.
However, full-year steerage for adjusted working revenue was maintained by the FTSE 100-listed group provider of fundamental merchandise for the grocery, hospitality, retail and healthcare industries, which mentioned the efficiency was in keeping with its expectations.
7:48am: ScS agrees bid strategy from Italy’s Poltronesofà
ScS Group PLC (AIM:SCS) has agreed a £99.4 million bid strategy from Poltronesofà SpA, the Italian furnishings retailer.
The provide values every ScS share at 280p consisting of 270p per share money and a 10p last dividend.
Alan Smith, non-executive chair of ScS, mentioned: “This cash offer, which the ScS Board unanimously recommends, comes at an attractive valuation.”
“It recognises the quality of the ScS Group’s operations, its cash resources, and the progress accomplished under Steve Carson’s leadership via his refreshed strategy.”
Poltronesofà has 167 shops in Italy, 106 shops in France and 27 additional shops throughout Europe (15 in Belgium, 9 in Switzerland, two in Cyprus and one in Malta).
It mentioned the deal follows a choice to proceed its geographic development and enter the UK couch market.
7:33am: Barclays beats forecasts, flags price cuts
Results from Barclays are in and it is a bit of a blended bag.
The lender beat revenue forecasts within the third quarter pushed by a powerful efficiency by its bank card enterprise but flagged additional actions could also be wanted to sort out prices.
Revenue within the financial institution’s company and funding financial institution missed expectations and Barclays diminished its outlook for internet curiosity margin this 12 months to between 3.05% and 3.1%, having already reduce this steerage in July.
The FTSE 100 listed lender mentioned pre-tax revenue within the three months ended September fell 4% to £1.89 billion from £1.97 billion the 12 months earlier than, though this was forward of the £1.77 billion consensus.
Income rose 5% to £6.26 billion from £5.95 billion, fundamental EPS fell to 8.3p from 9.4p whereas the return on complete fairness slipped to 11.0% from 12.5%.
CS Venkatakrishnan, chief govt, mentioned: “We delivered an 11.0% RoTE in Q3, against a mixed market backdrop, as we continued to manage credit well, remained disciplined on costs and maintained a strong capital position, with a Common Equity Tier 1 ratio of 14.0%.”
“We see further opportunities to enhance returns for shareholders through cost efficiencies and disciplined capital allocation across the group.”
Corporate and Investment Bank revenue decreased 6% to £3.08 billion from £2.82 billion the 12 months earlier than, reflecting decrease shopper exercise in each Global Markets and Investment Banking charges.
Barclays UK revenue decreased 2% to £1.87 billion, pushed by the affect from the switch of Wealth Management & Investments to Consumer, Cards and Payments the place revenue climbed 9% to £1.36 billion from £1.24 billion.
Group complete working bills decreased 4% year-on-year to £3.9bn as inflation, enterprise development and investments have been greater than offset by effectivity financial savings and decrease litigation and conduct costs, Barclays mentioned.
Bad debt provision ticked as much as £433 million from £381 million whereas the Teri 1 Capital Ratio improved to 14.0% from 13.9%.
Looking forward, Barclays mentioned it was concentrating on a price: revenue ratio proportion within the low 60s in 2023 and is taking a look at actions to scale back structural which can lead to materials extra costs within the fourth quarter.
It is concentrating on a RoTE of larger than 10% in 2023 and expects the UK internet curiosity margin (NIM) to be within the vary of 3.05%-3.10% in 2023.
The NIM was 3.04% within the third quarter in comparison with 3.01% final 12 months.
7:00am: FTSE 100 referred to as decrease, Barclays kicks off banking results
The FTSE 100 is predicted to open decrease on Tuesday forward of unemployment figures and a batch of PMI releases.
Spread betting firms are calling London’s lead index down by round 10 factors after closing down 27.31 factors at 7,374.83 on Monday.
US bond yields fell after billionaire investor Bill Ackamn mentioned he had ended his quick name on US Treasuries saying “there may be an excessive amount of threat on the planet to stay quick bonds at present long-term charges’.
The fall boosted know-how shares within the US though blue-chips fell additional.
Back in London, and alongside the delayed unemployment figures, Barclays kicks off the banking reporting season offering the early focus.
Updates are additionally due from Anglo American, Bunzl and Softcat (LSE:SCT).