Market report

Centrica takes dispute hit | FTSE 100 slips at close


5pm: ECB data dims FTSE 100

The FTSE 100 lost momentum in afternoon trade after ECB and US jobs data were released. The index closed 29.98 points lower at 6,968.30.

Danni Hewson, AJ Bell financial analyst, said: “On the face of it the latest set of US jobs figures is bad news for the narrative that recovery is on track.  New jobless claims were up by 51,000 but the lion’s share of the increase seemed to come from states where car makers have shut down for “re-tooling” and workers are temporarily allowed to claim benefits. 

“It’s not the whole story, there are concerns about the potential impact a new wave could have on employment prospects and Wall Street reacted according to type, the tech heavy NASDAQ once again finding the silver lining in the bad news.

“In the UK the FTSE 100 has failed to hang onto its forward momentum today, weighed down by the rather dovish stance of the ECB which spotlights the slowed momentum of recovery in the Eurozone.”

NatWest lost 2.6%, as the UK government said it plans to sell a large part of its stake in the bank.

9am: London edges higher

The FTSE 100 index was up 5.58 points ( 0.1%) at 7,003.86 in early trade even as key constituent Unilever fell 4.4% despite reporting interim sales growth.

NatWest fell 1.6% as the UK government unveiled plans to sell a large part of its stake.

Royal Mail rose 3.3% after Bernstein put an outperform rating on the stock.

7am: NatWest (RBS) stake sale

The taxpayers’ shareholding in NatWest (RBS) Group is to be cut further after the Government announced plans to offload a stake of up to 15%, which would see its total share fall to around 40%. 

Under the Trading Plan, Morgan Stanley will have discretion to effect a measured and orderly sell down of shares in the Company on behalf of HMT.

The earliest that sales will commence will be 12 August 

Full story here

7am: Centrica hit by dispute

British Gas

Energy group Centrica, which has been embroiled in a controversial “hire and fire” dispute today said “the difficult but necessary process” is now complete.

The company, which trades as British Gas and Scottish Gas, said Covid‐19 and industrial action associated with the restructuring of the workforce cost the group £80 million.

The reorganisation will see 4,000 jobs lost across the group, with 3,000 roles removed in 2020 and a further 1,000 to be removed over the course of 2021.

The number of organisational layers has been reduced from eleven to seven, with over half of the total reduction coming from management roles resulting in a significantly higher proportion of staff now in customer-facing roles.

“We are already seeing the benefits of the restructure in British Gas Energy, with the annualised cost per customer falling by £7 to £95 over the first six months.

“Centrica had over 80 different employee contracts, each with multiple variants, with many of the agreements dating back over 35 years. We needed to modernise these to enable us to best serve the changing expectations of today’s customers while retaining the quality of our service.”

It said that as part of its plan to exit oil and gas it will consider further divestments of smaller assets or businesses “if they help to simplify and de-risk the Group and we can realise good value for shareholders.”

It reported broadly flat operating profits for the first six months of 2021.

Adjusted operating profit from continuing operations, which excluded Direct Energy which it has already sold, came in at £262 million, compared with £264n in the first half of 2020.

7am: AssetCo confirms Rize deal

AssetCo, the acquisition vehicle chaired by Scottish fund manager Martin Gilbert, has confirmed that it is acquiring a 37% equity interest in Rize ETF in a deal worth £16.5 million.

Full story here

Global markets

The FTSE 100 was expected to open above 7,000 as the market rebound continues

IG says futures indicate the index of London large-caps to open up 18.62 points, or 0.3%, at 7,016.90.

Wall Street closed in positive territory with the Dow Jones Industrial Average and the S&P 500 ending the session 0.8% higher, and the Nasdaq Composite up 0.9%.

In China, the Shanghai Composite was up 0.3%, while the Hang Seng index in Hong Kong jumped 1.7%. Financial markets in Japan were shut for the Marine Day holiday.

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