Daily Business Live
Parcel growth at Royal Mail | Board changes at Lloyds
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5pm: London slips lower
The FTSE 100 closed 5 points lower at 7,078.35 as traders digested the Bank of England’s decision not to change QE or interest rates.
8.30am: London higher on Fed statement
Blue chip shares edged up in early trade following last night’s statement from the Federal Reserve chairman (see below) and head of the Bank of England’s decision at noon on QE and interest rates which is expected to determine no change.
The FTSE 100 was trading 25.5 points higher at 7,108.91.
7am: Royal Mail
Parcels growth continued to build at Royal Mail, with revenue for the five months to the end of August up by 8.2% year on year and by 17.7% compared to the same period in 2019.
Domestic parcel volumes increased by 34% compared to pre-COVID levels (April to August 2019), broadly similar to the trend seen in Q1. Reflecting the removal of lockdown restrictions during the summer, domestic volumes decreased by 5% compared to the same period last year, which included the first lockdown and closure of non-essential retail.
Addressed letter volumes (excluding elections) were down 19% compared to two years ago, reflecting the ongoing structural decline in letters.
Keith Williams, chairman, commented: “The first five months saw continued revenue growth across the Group, with both Royal Mail and GLS reporting higher revenues than the prior year.”
“In Royal Mail, we are increasingly confident that domestic parcels are re-basing at a significantly higher level than pre-COVID and believe we are maintaining our share of the market.
“Domestic parcel volumes are up around a third compared to pre-COVID. Domestic parcels performance continues to be more robust against ongoing challenges in international.
“Whilst we continue to expect further normalisation of parcel performance as we unwind from the pandemic and anticipate some upward pressure on costs, both adjusted operating profit and margin are expected to be higher in H2 compared to H1.
“GLS continues to deliver good volume and revenue growth, both year on year and against 2019. Whilst we are seeing upward pressure on costs in a number of our markets, we maintain our outlook for the full year of low single digit % revenue growth and c. 8% operating margin.”
7am: Prettejohn and Sinclair to leave Lloyds
Lloyds Banking Group has announced that Nick Prettejohn and Stuart Sinclair will step down as non-executive directors, with Mr Prettjohn also vacating the chairmanship of Scottish Widows to take over as chairman of TSB.
Sophie O’Connor, a non-executive director of Scottish Widows Group, will succeed Mr Prettejohn as interim chairman.
7am: Mitchells & Butlers
Pubs and brewing group Mitchells & Butlers said in the 18 weeks since full indoor trading reopened on 17 May in England like-for-like sales have been almost double (+97%) pre-Covid levels.
Chief executive Phil Urban said: “We are encouraged by the improvement in sales performance following the easing of restrictions.
“However, we are still seeing volatility and a contrast between sales performance at food led and wet led brands, highlighting the continuing uncertainty.”
Global markets – November taper announcement
US markets were given further clarity over the taper timetable for bond-buying and likely interest rate rises, while worries eased over the Evergrande crisis in China.
Federal Reserve chairman Jerome Powell steered market expectations towards a November taper announcement, with the conditions for reducing QE “all but met.”
Interest rate rises may follow more quickly than expected as the US central bank’s turn from pandemic crisis policies gains momentum.
“It wouldn’t take a knockout or super-strong employment report,” to start the “taper” of the bond-buying programme, with the process expected to wind down by the middle of next year, said Mr Powell at a press conference.
The US non-farm payrolls report for September will be released in early October, the last before Fed policymakers re-group in November.
On Wall Street the Dow Jones Industrial Average closed 338 points or 1% higher, whilst the S&P 500 was up 0.95%. The Nasdaq performed even better, adding 1.02%.
In Asia, Hong Kong’s Hang Seng gained 0.43% and the Shanghai Composite index added 0.37%, but Japan’s Nikkei was 0.67% lower.