Market report

Metro soars on bid interest | Banks fall on rate hold


5pm: Metro Bank shares leap

Metro Bank

Metro Bank shares leapt 30% after it said it has received a takeover approach from private equity firm Carlyle Group.

The challenger bank said that, while the approach does not constitute a formal offer, it has engaged with Carlyle.

Metro Bank was valued at just under £180m at the close of trading on Wednesday.

It has been focused on turning around its fortunes since a major accounting error in 2019 which forced out its top bosses and prompted a plunge in its share price.

The blue chip index closed higher as its overseas earning constituents benefited from the pound’s fall after the Bank of England held interest rates.

The FTSE 100 index closed up 31.02 points, or 0.4%, at 7,279.91 while the domestically-focused FTSE 250 rose 1.5%.

Danni Hewson, AJ Bell financial analyst, said: “Rather like the boy who cried wolf, the Bank of England’s failure to raise interest rates today after giving what many believed was a clear indication that it would, could lead many investors to simply ignore future guidance. 

“Today’s hike had been priced in, it’s failure to launch has driven London markets up this afternoon, with the more domestically focused FTSE 250 in particular enjoying what in this case feels like a rather unhealthy jump.  Generally real estate exhaled and financials winced.”

High street banks ended the session as the worst performers as the low interest rate continued to squeeze their margins. NatWest closed down 5.6%, Lloyds 4.5% and Barclays 3.9%.

JD Sports Fashion closed up 3.7% after the UK Competition & Markets Authority demanded the sportswear retailer sell Footasylum.

Reaction to Bank of England decision here

9.30am: Car sales fall again

New car sales fell for the fourth consecutive month in October, down 24.6% from this time last year to 106,265, according to new figures from the Society of Motor Manufacturers and Traders (SMMT). This was the weakest October since 1991.

Chip shortages and tax rises mean industry expects to finish year on 1.66m units, only 1.9% ahead of COVID-19-hit 2020

But environmentally conscious consumers continued to move away from petrol and diesel cars, in the month ahead of COP26.

Battery electric vehicles equalled their September market share of 15.2% with 16,155 units, while plug-in hybrid vehicles grew to 7.9% or 8,382 units.

8.30am BT rises

BT was the top riser in early trade, climbing 6.05% to 150.75p after its results beat expectations and it restarted dividend payments.

The telecoms giant saw six month revenues drop 3% to £10.3bn while pretax profits fell 5% to £1bn.

But it said its cost cutting programme was 18 months ahead of schedule, with an initial £1bn of savings and the expectation of an addition £2bn by the end of 2024, brought forward from 2025.

The FTSE 100 was 21.37 points or 0.29% higher at 7270.26.

7am: JD Sports fury over CMA decision

JD Spiorts in St James

JD Sports has reacted angrily after a final ruling from the competition watchdog that it must sell the Footasylum chain it bought for £90m in 2019.

The Competition and Markets Authority said the merger would mean that Footasylum would no longer face competition from JD Sports so customers would have fewer options and could face higher prices, fewer discounts, and less choice of products in-store

JD said the latest ruling “defied logic” and it was considering its options.

Latest here

7am: Aston Martin sales double

Aston Martin reported a 104% increase in third-quarter sales to dealers, which rose to 1,349 cars, as the luxury automaker’s first sport utility vehicle, the DBX, continued to boost demand this year.

The brand, which posted a £97.9m pre-tax loss between July and September, said it expected to deliver its first steps towards improved profitability this year as it undergoes a transformation plan.

Full story here

7am: BT first half declines

BT reported a 3% decline in first-half revenue to £10.3 billion driven by falls in enterprise and global and a flat performance in consumer.

The company recently strengthened its defences against a possible takeover bid from its largest shareholder Patrick Drahi.

It reported adjusted core earnings of £3.75 billion, up 1%, helped by tight cost management.

7am: Sainsbury’s in good position

Sainsbury's Local

Sainsbury’s has revealed a leap in half-year sales and profits and said it is in a “good position” despite supply chain disruption across the UK.

Underlying profit before tax for the half year came in at £371 million, up 23% on last year and 56% on H1 19/20, reflecting higher grocery sales and effective cost reduction programmes, particularly at Argos.

Statutory profit before tax of £541m reflected significantly lower restructuring and impairment costs versus H1 20/21 and £181m of exceptional income from settling legal disputes

It has declared an interim dividend of 3.2 pence.

7am: Virgin Money accelerates digital plan

Virgin Money expects underlying profit before tax to soar by 546% to £801m thanks to “strong financial momentum” and the board plans to declare a final dividend of 1p.

David Duffy, chief executive, said: “We performed very strongly in FY21, with an expected return to statutory profit before tax underpinned by significant underlying profit growth.”

Full story here

7am: Iomart’s cool savings

Cloud computing company Iomart has installed a prototype cooling system in its Glasgow data centre with the potential to cut electricity consumption by half.

The company says it could have a significant impact on the carbon footprint of the data centre industry as a whole and help the industry on its way to carbon neutrality.

Full story here

Oil laggards

A significant percentage of oil and gas firms in the Aberdeen area are yet to sign up to net zero targets, according to a new survey from the chamber of commerce and accountancy firm KPMG.

The 34th oil and gas survey showed 41% have not developed a specific net zero or carbon reduction strategy, while a further 27% have done so “but have not set a deadline”.

Global markets

The US Federal Reserve will start scaling back its £88bn a month pandemic stimulus package in November with plans to end bond purchasing in 2022.

The S&P 500 and Nasdaq notched record all-time closes for their fifth straight sessions, while the Dow Jones Industrial Average posted a record close for the fourth session in a row.

The Dow Jones closed up 0.29% whilst the S&P 500 added 0.65%. The Nasdaq climbed 1.04%.

This morning, in Asia, Japan’s Nikkei was up 0.9% whilst Hong Kong’s Hang Seng edged 0.14% higher. The Shanghai Composite rose 0.78%.

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