UK house prices fall | M&B ‘challenged’ | Moonpig warning
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5pm: London dips at close
The FTSE 100 opened higher but closed 32.2 points lower at 7,489.19.
4pm: Bank jobs chopped
A slowdown in deal making has knocked investment banks’ finances and is leading to a series of redundancy announcements.
Goldman Sachs has laid off staff and US lender Morgan Stanley yesterday became the latest to announce job losses, shedding 2%, or around 1,600, of its workforce.
European bank Credit Suisse said it is ditching 9,000 workers, although that decision was driven by attempting to turnaround years underperformance.
House prices fall
House prices across the UK dropped in November for the third consecutive month and at their fastest monthly rate since 2008.
Prices fell by 2.3% last month, compared to a 0.4% decline in October, according to the latest Halifax survey. The annual rate slowed from 8.2% to 4.7%.
Figures due out tomorrow are expected to show prices continuing to rise in Scotland but at a declining rate and for them to fall in the new year.
Kim Kinnaird, director of Halifax Mortgages, said: “While a market slowdown was expected given the known economic headwinds – and following such extensive house price inflation over the last few years (+19% since March 2020) – this month’s fall reflects the worst of the market volatility over recent months.”
FTSE 100 defies US fall
“The FTSE 100 shrugged off losses on Wall Street overnight to trade higher on Wednesday morning as China showed genuine signs of easing up on Covid restrictions,” says AJ Bell investment director Russ Mould.
“Warnings from big American investment banks of a US recession in 2023 are setting less than happy mood music heading into the end of 2022 and the prospects of a Santa rally are fading by the day.
“The Federal Reserve meets next week to decide its latest rate increase and it still has plenty to think about as economic data delivers conflicting messages about the future trajectory of inflation and growth.
“Further evidence of a slowdown in UK house prices is unsurprising, but it underlines how tough the property market is right now as mortgage rates remain elevated and people don’t feel in a position to make such a big commitment thanks to uncertainty and cost of living pressures.
“The turmoil could become self-fulfilling as messages about double-digit falls in house prices moving forward lead potential purchasers to sit on their hands.”
At 9.30am the FTSE 100 was trading about 20 points higher at 7,540.77.
Cushman & Wakefield change
Murray Strang is taking over as regional managing partner at Cushman & Wakefield, succeeding Stuart Dorward who steps down after 10 years in the role.
Mitchells & Butlers
Pubs chain Mitchells & Butlers said recent sales have been encouraging, but the group flagged challenges arising from surging energy and labour costs, after posting a 53% jump in annual profit.
“The trading environment remains highly challenging, with cost inflation continuing to put pressure on margins and we are ever mindful of the pressures that the UK consumer is facing,” said chief executive Phil Urban.
In the 10 weeks since the end of its fiscal year on 24 September, M&B said sales rose 6.5% on a like-for-like basis from last year and 9.2% over the corresponding period in the pre-pandemic fiscal year 2019.
The owner of the Toby Carvery, Harvester and All Bar One brands said annual operating profit grew to £124m, while pre-tax profit came in at £8m, compared to a loss of £42m a year earlier.
Russ Mould, investment director at AJ Bell said: “Interestingly, food has been the big driver of sales for the business in 2022, not drinks. This may surprise a lot of people as someone strapped for cash might easily avoid going out for a meal as it can cost a lot of money, whereas they might be more prepared to have a few pints of beer.
“Helping Mitchells & Butlers is the strength of its brands including Harvester and that some of its competitors have fallen by the wayside. The casual dining market has seen quite a few victims over the past year so Mitchells & Butlers could pick up market share even without adding new sites.
“The only problem is that cost pressures remain intense. Having modelled various scenarios, the company says in an adverse situation there is a risk that debt covenants would be breached. That’s something for investors to consider before getting carried away by the near-9% rally in its share price today.”
Online greetings card company Moonpig lowered its annual revenue forecast and reported lower first-half profit after a tough September and October in which its orders were hit by strikes at Royal Mail.
The company said it expects revenue for the year ending 30 April to be about £320m, down from its previous forecast of £350m.
Fashion chain Quiz Clothing returned to profit for the half year to the end of September but said cost of living pressures meant the near-term outlook is difficult to predict for many UK retailers.
Stocks in London were expected to open higher after China announced a nationwide loosening of its strict zero-Covid measures.
The pound has recovered from record lows against the dollar and multi-month lows against the euro over recent weeks amid expectations that the Federal Reserve will tame its interest rate hikes.
The pound to dollar exchange rate has risen 10% since early October to $1.2243 yesterday, though it slipped to $1.2117 early today could weaken further if the Federal Reserve raises rates by more than 50 basis points at its next meeting on 14 December.
Wall Street was lower for the fourth session in a row, with the Dow Jones Industrial Average ending down 1%, the S&P 500 1.4% off, and the Nasdaq Composite down 2%.
Brent oil was trading at $79.42 a barrel early Wednesday, lower than $80.35 late Tuesday.