Daily Business Live
Footsie plunges; Menzies raises £22m; Macfarlane grows
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5pm: Shares dive amid inflation worries
London shares took a hammering as investors’ worries over inflation turned into a selling frenzy.
The FTSE 100 index closed down 175.69 points, or 2.5%, at 6,947.99. The FTSE 250 plunged 2.3% and the AIM All-Share closed down 1.7%.
In the blue chip index all but one stock ended the sesssion in the red, with British Airways owner International Consolidated Airlines the worst performer, down 7.4%.
NatWest Group, owner of RBS, closed 3.4% lower at 190.4p after the UK government raised £1.1 billion from the sale of 580 million shares and reduced its holding to 54.8%. The placing price was 190p, a 3.6% discount to Monday’s closing price of 197.05p.
In the US, the Dow Jones Industrial Average was down 1.7%, the S&P 500 index was 1.4% lower, while the Nasdaq Composite lost 1%.
Tech stocks, which surged during much of the coronavirus pandemic, continued to endure pressure as investors shunned those that may be hit by higher interest rates.
4.40pm: Menzies raises £22m
John Menzies, the global aviation services business, is raising £22 million through a placing, subscription and a retail offer.
In a statement issued after the market the Edinburgh-based company said the solid recovery in the year to date has provided a strong platform for further progress over the remainder of the year.
Philipp Joeinig, chairman and CEO, said: “Our actions in recent years to restructure the business are already delivering improved profitability, despite aviation activity levels continuing to be well below pre-Covid 19 levels. This is very encouraging as we look towards our profitability in the years ahead.
“Our pipeline of acquisition and joint venture opportunities has accelerated in recent weeks and we now have some very exciting opportunities to expand our network across all product categories. Current market conditions mean that adding these opportunities now, represents a compelling opportunity to create significant shareholder value.”
The new funding will come through a combination of a non-pre-emptive share placing, a subscription by directors and senior managers of the group for approximately £5.3m and a retail offer of new ordinary retail shares of up to £1m.
4pm: Biscuit factory to close
McVities’ biscuit factory in Glasgow, which has roots in Scotland stretching back 200 years, is expected to close with the loss of 468 jobs.
Noon: Macfarlane grows in Q1
Ahead of Glasgow packaging group Macfarlane’s AGM, chairman Stuart Paterson, said: “Macfarlane Group has made a positive start to 2021, with sales in the first quarter 15% ahead of the same period in 2020. Group profit for the year to date is also well ahead of that achieved in 2020.
“Covid-19, supply shortages and raw material price increases will continue to have an impact on the markets we serve for the remainder of 2021.
“However, we have consistently demonstrated our ability to address such challenges and effectively support our customers. We are therefore confident that the resilience of our business model, together with the skill and commitment of our people, will ensure 2021 will be another year of good progress for Macfarlane Group.”
Non-executive director Andrea Dunstan will step down on 1 September. The board has begun a search for her replacement.
11.15am: SNP election setback boosts sterling
John Hardy, Saxo Markets’ head of forex strategy, said in a podcast that the Scottish referendum is now ‘so far over the horizon’ that it won’t currently be a factor in the price of the pound.
“Sterling over the weekend bolted out of the gates because of the Scottish election results, showing the Scottish National Party did not get that absolute majority that was largely expected,” he said.
“This takes a lot of the steam out of the mandate for a new Scottish independence referendum.
“There was a generally strong showing for the Conservatives in other local elections across the UK, despite some pretty scandalous stories coming to light that could have impacted Boris Johnson’s party’s chances.
“It all adds up to the Scottish Referendum being seen as so far over the horizon that it’s not worth pricing in any worry right now.”
9.30am: Market suffering inflation jitters
“The market just can’t shake the inflation fears which are clouding the recovery from Covid,” says AJ Bell investment director Russ Mould.
“The valuations of the tech-based growth companies in the US are harder to justify in an inflationary and rising interest rate environment – where lower risk assets typically offer higher returns – hence the big fall in the Nasdaq yesterday.
“However, one UK technology-orientated name which is doing very nicely indeed is sports and health products online platform The Hut Group or THG for short.
“THG is raising a large amount of money, some of which is coming from Japanese investor Softbank which has also struck a deal giving it the option to invest in THG’s Ingenuity division.”
The FTSE 100 was off its 6953 low for the day and was trading 144 points (2.02%) lower at 6,979.55.
8.30am: FTSE 100 plunges
Worries over inflation spooked investors around the global markets, with the FTSE 100 plunging by almost 2% (137.68 points) in opening trades to 6,986.
Despite foreign holidays resuming, IAG, owner of British Airways, was the biggest faller in the leading index, down 4.57%. Scottish Mortgage was 4.34% lower.
NatWest (RBS) was down 3.35% after the Treasury announced last night that it will be offloading more stock.
7am: Morrisons in growth mode
Supermarket chain Morrisons said it is on track for strong profit growth and low debt after like-for-like sales rose 2.7% in the 14 weeks to 9 May. Total sales, including fuel, rose 5.3%.
David Potts, Morrisons’ chief executive, said: “The pandemic is not yet over, but it is in retreat across Britain and there is much to be positive about as something approaching normal life begins to take shape.
7am: Cairn confident over India claim
Cairn Energy CEO Simon Thomson said talks are continuing with regard to the award in its favour for damages of $1.2bn plus interest and costs in a tax battle with the Indian government.
“This ruling is binding and enforceable under international treaty law,” he said in an update ahead of the AGM.
“Whilst India has sought to challenge the basis of the award through set-aside proceedings in the Dutch courts, we remain confident of our position and continue constructive engagement with the Government of India whilst at the same time taking all necessary actions to protect our rights to the award and access the value of it as early as possible.”
He said the company was positioned to deliver Cairn’s next stage of growth, “with an important first building block being the proposed acquisition of Shell’s Western Desert Assets in Egypt.”
Cyberattack pipeline still down
Frantic owners of the biggest gasoline pipeline in the US say they will not restart operations for several days as consumers fear a cyberattack will lead to fuel shortages.
The FTSE 100 is likely to be pulled sharply back from its recent 14-month highs as inflation worries caused anxiety among global investors.
London’s benchmark of blue-chip shares has been called 87 points lower on by spread-betters in the City.
Asian markets were lower this morning, with the Nikkei falling 3.2% and the Hang Seng retreating 1.7%.
Wall Street closed lower as inflation concerns returned and steered investors away from growth stocks in favour of cyclicals, which stand to benefit most as the economy reopens.
The Dow Jones Industrial Average fell 34.94 points, or 0.1%, the S&P 500 lost 44.17 points, or 1.04%, and the Nasdaq Composite dropped 350.38 points.