Four hours into today’s trading session, here’s a look at some of the price action on the FTSE 100.
The index is down 31 points to 7,042. Banks are leading the losses, after NatWest today recorded an “impairment charge” of £242 million for the last three months alone. That compares favourably to Barclays at £381 million, Lloyds Bank at £668 million and HSBC’s £930 million but is still a clear sign of looming distress.
Shares in Glencore also fell today after it lowered annual production guidance for some commodities, blaming factors such as extreme weather in Australia and industrial action at a nickel mine in Canada.
Chevron profits top $11 billion as oil and gas production reaches record high
Energy giant Chevron beat analyst estimates to post its second highest-ever quarterly profits amid a surge in demand for oil and gas.
The firm posted third quarter net profits of $11.2 billion (£9.6 billion). Earnings per shares stood at $5.78, almost a dollar ahead of market expectations.
“We delivered another quarter of strong financial performance,” Chevron Chief Executive Michael Wirth said, adding oil and gas production reached “another quarterly record.”
French slowdown increases fears of EU-wide recession
Figures from France’s slowing economy today did little to ease fears that Europe will enter recession this winter. The eurozone’s second largest economy reported growth of 0.2% in the third quarter, down from 0.5% in the previous three months.
Germany’s flash GDP figure showed modest growth of 0.3%, up from just 0.1% previously and slightly ahead of market expectations.
France’s outturn was in line with forecasts but economists are braced for a flat performance in the current quarter as inflation and rising interest rates squeeze spending.
The European Central Bank yesterday doubled its main deposit rate to 1.5%, with policymakers warning more rises are on the way to fight against inflation.
On a yearly basis, France’s statistics agency said GDP expanded by 1% in the third quarter compared with 4.2% growth in the second quarter.
Glencore production guidance hits shares, FTSE 100 lower
Glencore shares today fell 3% after it lowered annual production guidance for some commodities, blaming factors such as extreme weather in Australia and industrial action at a nickel mine in Canada.
Shares were 13.6p lower 487.4p and Rio Tinto fell 3% or 155p to 4509p as the FTSE 100 index dropped 55.70 points to 7017.99.
Mining valuations have been under pressure in recent days, fuelled by worries over the demand outlook in China and after a lacklustre reaction to latest production reports, including from De Beers owner Anglo American yesterday.
Glencore reported a big quarterly drop in copper output as it reduced annual guidance for several commodities, including in coal due to severe flooding in New South Wales.
Projections for zinc output have also suffered because of supply chain issues in Kazakhstan stemming from the Ukraine war, with nickel lower due to a recent 15-week strike at its mining complex in northern Quebec. However, Glencore’s giant marketing operation is expected to deliver an above-average second half performance.
The selling pressure for miners came as investors retreated to the sidelines, shaken by Amazon’s poor earnings figures and nerves ahead of next week’s interest rate decisions in the UK and United States.
More big rises are expected, in sharp contrast to today’s decision by the Bank of Japan to maintain its key short-term interest rate at minus 0.1%
Amazon’s update hit consumer-focused stocks, with transatlantic retailer JD Sports Fashion 3% lower, off 2.7p to 98.8p.
In the FTSE 250 index, which fell 1.2% or 210.56 points to 17,871.36, ASOS dropped 30.5p to 615.5p and consumer magazines publisher Future slid 67p to 1171p amid a wide-ranging sell off for tech and growth stocks.
Insolvencies rise 2%, bankruptcies rise 4% in latest sign of economic woes
Insolvencies rose 2% in the three months to September, government data shows, in the latest sign the UK economy is edging closer to recession.
One in 405 adults entered insolvency between 1 October 2021 and 30 September 2022, an increase of 3% on the previous year, but overall numbers were down slightly on the previous quarter.
Bankruptcies rose by 4% compared to the previous quarter to 1,713, but were lower than 2021 levels. Insolvencies soared in the second half of 2021 as the government began to withdraw its emergency coronavirus support package for businesses.
NatWest boss: People are worried
BRITAIN’S top four high street lenders have set aside towards £2.5 billion this week to deal with bad debts, a clear sign that the bankers are preparing for a recession.
Today NatWest recorded an “impairment charge” of £242 million for the last three months alone. That compares favourably to Barclays at £381 million, Lloyds Bank at £668 million and HSBC’s £930 million but is still a clear sign of looming distress.
That £2.5 billion figure doesn’t include write offs from other major high street lenders, such as Spanish owned Santander or Nationwide Building Society.
Fears of a house price crash of perhaps 30% are growing. That would leave many people in negative equity, just as they come to renegotiate mortgage deals at much higher prices as interest rates spiral.
NatWest chief executive Alison Rose said the bank has done 600,000 financial health checks as it seeks to be proactive in managing people’s finances.
“The levels of anxiety among people are high,” she told the Standard. “We are not yet seeing mortgages going into arears, but we know people are very worried.”
Tech billionaires lose £50 billion in a week as earnings figures disappoint
Four of the world’s richest tech billionaires have seen their wealth plummet a combined £50 billion in the past week as squeezed household incomes dampen consumer demand and soaring labour costs hurt profit margins.
Meta founder Mark Zuckerberg’s wealth dropped by £12 billion after Meta shares tumbled 20% as investors reacted with disappointment to a 52% drop in net income to $4.4 billion (£3.8 billion) in the quarter to 30 September.
Google founders Larry Page and Sergei Brin lost a combined £20 billion after Google parent Alphabet posted sales figures that came in around $2 billion short of analyst expectations.
Meanwhile Jeff Bezos is set to lose some £22 billion from his wealth today as Amazon shares fell 19% in after-market trading overnight as the tech giant warned profits were set to dip in the fourth quarter amid increased labour and delivery expenses.
Matt Britzman, Equity Analyst at Hargreaves Lansdown, said “Clearly, Amazon went too big too soon on its expansion plans and it’s had to put the brakes on and then some to try and get costs back under control.”
FTSE 100 down 0.9%, Glencore falls 3% after update
Sellers are in control of the London market, with the FTSE 100 index down 0.9% or 64.54 points to 7009.15 and the FTSE 250 index off 1.2% or 225.59 points to 17,856.33.
Confidence has been shaken by Amazon’s poor earnings figures, while investors are also positioning for next week’s interest rate decisions in the UK and United States.
Big retail sector fallers include JD Sports Fashion, which generates a big chunk of its revenues in the US. Its shares were 3% lower, off 2.7p to 98.8p.
Mining stocks added to the pressure after Glencore downgraded its annual production guidance for some commodities. Its shares dropped 3% or 15.4p to 485.6p and Rio Tinto lost 145p to 4519p.
Lucky Voice plans karaoke expansion
The owners of the Lucky Voice karaoke bars have unveiled plans for a huge expansion and investment programme after punters flooded back to their venues far more quickly than expected after the pandemic.
The company, which has London venues in Soho, Islington and Holborn attended by celebrities including Harry Styles, Paul McCartney and Gwyneth Paltrow, said trade surpassed 2019 levels “within weeks” of reopening in May last year. Between March and May this year revenues were 54% up on the same period in 2019.
Under the new plan the business aims to have 10 venues by the end of 2024 “including a significantly expanded presence in London.” It has also earmarked £500,000 for upgrading its exisiting sites following a £300,000 refurbishment of the original Lucky Voice on Poland street in Soho..
Managing director Charlie Elek, said: “We’ve been delivering phenomenal nights out since 2005, and we’re sounding better than ever in 2022. The refurbishment of our Soho site forms part of a wider strategy for the business, as we seek to grow and invest in our venues to ensure we provide the most amazing experience, both for guests and for our teams. Our mission is to combine karaoke with great service, technology and food and drink, and we’re constantly thinking about how to give people their favourite night out.”
NatWest upbeat but shares fall
NatWest boss Alison Rose today said the high street lender continued to deliver a strong financial performance after third quarter profits improved on a year earlier to £1.1 billion
The impact of base rate rises meant the bank’s net interest margin of 2.99% was 27 basis points higher than the second quarter of the year.
NatWest has taken a bad debts charge of £242 million in relation to its core business, which it said reflected scenario planning rather than the underlying book performance where conditions continue to be benign.
Chief executive Alison Rose said: “The bank’s strong capital and liquidity mean we are able to help those who are likely to need it the most.”
Shares fell 6%, however, as increased inflationary pressures mean the bank no longer expects costs in 2023 to be broadly stable.