Daily Business Live
Heathrow raises travel outlook | Boohoo hires CFO
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5pm: Market close: FirstGroup deadline extended, stocks fall
FirstGroup has been granted an extension to a deadline to consider a £1.2 billion offer from private equity company I Squared Capital Advisors. Full story here
After a brief flirtation into positive territory the FTSE 100 index closed lower with the mood staying cautious amid weak PMI data, higher interest rates and recession worries, while another UK rail strike took its toll and BA workers at Heathrow voted for industrial action.
At the close, the UK blue-chip index was 68.77 points, or 1% lower at 7,020.45, just above the session low of 7,014.19, and well below the morning peak of 7,115.80.
Ocado closed the best performer, up 5.1%. Shares in the online grocer and warehouse technology firm had fallen earlier in the week on the back of fundraising.
Trainline shed 10%, the worst mid-cap performer as rail strikes continued.
Naked Wines plunged 43% after the wine retailer warned that it expects little sales progress in the year ahead.
The Dow Jones Industrial Average was off 0.03%, while the broader S&P 500 index gained 0.3% and the tech-laden Nasdaq Composite added 1.0%
9.30am: London lower
The FTSE 100 dipped at the open and remains below the waterline, down 40 points at 7,049.84.
“Red was the dominant colour on the markets across Asia and Europe, following a similar showing on Wall Street last night. Investors just cannot find a good enough reason to shift their bad mood and so the selling continues,” says Russ Mould, investment director at AJ Bell.
“The FTSE 100 fell nearly 1%, thanks mainly to weakness in commodity producers. The basic materials sector, which includes miners, and the oil-heavy energy sector both dropped by 1.3%. Close behind was a 1% drop in the real estate sector. Healthcare, industrials and utilities were also weak.
“Investor sentiment towards commodity producers is heavily influenced by the global economic outlook which is not great at present. The market is worried that central bankers will make a policy mistake in their fight against inflation by pushing up interest rates too fast and causing a recession. The perfect scenario is a soft landing, but that is hard to achieve.”
7am: Heathrow upgrade
Heathrow has raised its passenger number outlook, saying it expects 54.4 million people to travel through the London airport in 2022.
The upgrade from 53 million forecast last month is expected to increase its revenue and adjusted core profit for the year, it said.
However, operating costs are also expected to rise by 47% to £1.22 billion this year partly because of very high inflation in utilities costs due to higher energy prices, it added.
7am: Public sector borrowing
Public sector borrowing hit £14bn last month as rising debt interest payments offset falling public sector spending following the pandemic.
It remains £8.5bn more than in May 2019, prior to the pandemic.
Chancellor Rishi Sunak said: “Rising inflation and increasing debt interest costs pose a challenge for the public finances, as they do for family budgets.
“That is why we are taking a balanced approach – using our fiscal firepower to provide targeted help with the cost of living, while remaining on track to get debt down.
“Being responsible with the public finances now will mean future generations aren’t burdened with even higher debt repayments, and we can secure our economy for the long term.”
7am: Boohoo hires CFO
Online fashion retailer Boohoo has appointed Shaun McCabe from Trainline as chief financial officer. He will succeed Neil Catto whose role will transition to an executive director, remaining on the group board, with responsibility for strategic projects. Mr McCabe is expected to take up his new role later this year.
Asian markets were improving towards their close as London traders reflect on testimony from US Federal Reserve chair Jerome Powell.
Warning that a recession was a real possibility, Mr Powell also indicated that fighting inflation was also critical and that rising prices had to be halted.
“That left markets in somewhat of a no man’s land,” said Jeffrey Halley, senior market analyst at Oanda.
Wall Street’s main indexes ended with slim losses. The Dow Jones Industrial Average fell 0.15%, the S&P 500 lost 0.13%, and the Nasdaq Composite dropped 0.15%.
In China, the Shanghai Composite was up 0.7%, while the Hang Seng index in Hong Kong was up 1.4%. Tokyo;s Nikkei fell 0.1%.