FTSE 100 Live December 14: UK inflation rate at 10.7%, mandatory liquidations quintuple


Fast fashion customers pay more as prices rise at Zara owner Inditex boosting profits

The company behind fast fashion chain Zara reported rising sales and profits for much of 2023 after price hikes made in the fall failed to deter shoppers .

Inditex, the world’s biggest clothing retailer, said sales in the nine months to the end of October rose by nearly a fifth to just over 23 billion euros (£20 billion ), with profits also up by a fifth to 6.5 billion euros.

And the higher prices don’t seem to hurt sales during peak holiday shopping season. Between the beginning of November and the first week of December, they are up 12% over one year. This happened after an average price increase of around 5%.

The Spanish company said its operating expenses in the nine-month period rose 17%, below sales growth.


BT Group topped the FTSE 100 chart in midday trading after news of its broadband strategy was well received by investors. The landline operator has filed details of its so-called Equinox 2 offer with regulators. There was also news of a renewed deal with Nokia covering analytics software.

Ocado was again the biggest loser as the battle of opinions over the prospects of online retailers and e-commerce technology providers continued to play out in the London market.


Taylor Wimpey shares fall after downgrade, FTSE 100 lower

Housing construction stocks remained under pressure today as more City downgrades offset the encouragement of a lower inflation rate in the UK.

JP Morgan’s lower price targets for Taylor Wimpey and Redrow sent shares of the pair down 2% and 5% respectively and kept the rest of the sector under cloud.

The selling pressure came despite today’s inflation reading of 10.7% lowering the City’s forecast of the Bank of England’s eventual peak in interest rates in 2023.

Taylor Wimpey, who fell 1.7p to 102.5p following JP Morgan’s 60p price target cut to 110p, was one of the biggest losers in a lackluster session for the market Londoner.

The FTSE 100 index weakened 29.13 points to 7473.76 as traders awaited the direction of tonight’s Federal Reserve interest rate decision, with other stocks down more than 2%, including Flutter Entertainment and British Airways owner IAG.

The best performance came from BT Group, which had traded at its lowest level since November 2020 earlier this week. Its shares rose 3% or 3.5p to 117.4p as its Openreach arm submitted new proposals to Ofcom for wholesale fiber optic broadband pricing.

BT was joined on the riser chart by North Sea explorer Harbor Energy, which rose 2% or 7.5p to 318.7p last week as a FTSE 100-listed stock.

The FTSE 250 index fell 73.63 points to 19,012.66, but the Volution ventilation products business added 11p to 361.5p. It revealed revenue up 7% as interest in energy efficiency and indoor air quality continued to drive demand in its new fiscal year.


Insolvencies jump 21% in November to reach top 2,000

The number of business insolvencies recorded in November 2022 was 2,029, 21% more than the same month a year earlier and 35% more than in 2019, according to data released this morning by the insolvency service.

There were 290 compulsory liquidations in November 2022, more than 5 times more than in November 2021 and 7% more than in November 2019. The number of compulsory liquidations has increased from historical lows observed during the coronavirus pandemic .

Inga West, a solicitor at Ashurst Law Firm, said: ‘The real number to watch here is the comparison to the pre-pandemic period in 2019 rather than last year, as the 2021 numbers are still somewhat affected by the government’s Covid support measures.

“The bulk of corporate insolvencies in November 2022 are still creditor voluntary liquidations (1,595) – which show a staggering 50% increase from November 2019. Mandatory liquidations (290) are still on the rise, the HMRC increasing its liquidation petition activity, in common with a single bank, which has issued 95 petitions in the past two months This is a relatively new development CVA and administration activity remains lower to 2019.

“It’s a very similar pattern to last month. It shows that the ‘heat’ of insolvency is still weighing heavily on SMEs, which generally have less capacity to absorb economic shocks than their larger counterparts. But that can change.


Downgrades hit homebuilding stocks, BT shares rebound 2%

London’s FTSE 100 index fell 21.36 points to 7481.53 as traders were sidelined ahead of tonight’s interest rate update from the US Federal Reserve.

Homebuilders were high on the fallers board after JP Morgan’s cautious rating on the sector included lower price targets for Taylor Wimpey and FTSE 250-listed Redrow.

Shares of Taylor Wimpey fell 2.35p to 101.85p at the top of the FTSE 100 fallers chart, with others on the back foot including Barratt Developments with a drop of 7.1p to 401.9p.

BT Group shares sparked buying interest after hitting their lowest point since November 2020 earlier in the week. The stock rose 2% or 2.35p to 116.25p at the top of the FTSE 100 riser chart.

The FTSE 250 index weakened 0.5% or 91.16 points to 18,995.13, with shares of TUI and Watches of Switzerland down 5% and 4% after their respective updates . Redrow fell 4% or 20.8p to 451.6p following JP Morgan’s target price cut to 390p.


HSBC to stop funding new oil and gas fields under updated green policy

HSBC has pledged to stop financing new oil and gas fields as part of an updated environmental policy aimed at reducing global levels of greenhouse gas emissions.

Funding for new oil and gas will be suspended, HSBC said, but it will continue to work with energy companies where they share the same net zero commitments.

In a statement, HSBC said: “We will no longer provide new loans or capital markets financing for the specific purpose of projects relating to new oil and gas fields and related infrastructure where the primary use is in conjunction with new fields.

“We will therefore continue to provide financing to maintain oil and gas supply in line with current and future declines in global oil and gas demand, while accelerating our activities to support clean energy deployment.”

HSBC shares were flat on the news.


Tui shares slump as recovery lags behind pre-pandemic levels

Shares of travel business Tui fell 5.3% at the open of trading as the sales recovery continued to lag pre-pandemic levels.

The business recorded sales of €16.5bn (£14.2bn) for the year to September 2022, more than triple last year’s sales but below 18.9 billion in 2019, while it recorded a loss of 213 million euros.

Richard Hunter, Head of Markets at Interactive Investor, said: “TUI has seen improvements across the board as it continues its recovery from the ravages of the pandemic, but this recovery is somewhat of a marathon and not a sprint. .

“Even so, a swallow doesn’t make a summer and investors will need to see evidence of an established trend before warming up to the company’s outlook. In the meantime, inflation, disruptions, labor shortages and competition from lower-cost operators that may well capture the imagination of cash-strapped consumers could all create headwinds.


Falling inflation won’t stop the BoE from raising rates by 0.5%

The Bank of England is expected to raise interest rates tomorrow by 0.5% to 3.5%, but today’s inflation of 11.7% means a consecutive 0.75% hike is now considered less likely.

Capital Economics said inflation eased in six of the 12 major categories covered by the Office for National Statistics, encouraging that the fall in the annual rate is not one-off.

UK Chief Economist Paul Dales said: “Overall inflation is past its peak and will continue to fall from here. This will bring a sigh of relief to Threadneedle Street.

“But with a still resilient economy and still strong wage growth, the Bank of England will not be complacent.

“So interest rates will go up further, but the Bank will probably raise them at a slower pace and the risk is that they peak at a level below the 4.5% we expect.”


US rate hike expectations soften, FTSE 100 looks stable

The S&P 500 ended yesterday’s session up 0.7%, but was up to 2.7% stronger after US inflation came in below expectations at 7.1%.

This is the lowest reading of 2022 so far and also the fifth consecutive decline since inflation peaked at 9.1% in June.

With inflation surprisingly lower, investors have adopted a much more dovish trajectory for the Federal Reserve over the next few months.

Deutsche Bank strategist Jim Reid said: “There is no doubt that they will move 0.5% in today’s meeting, but the futures contracts have changed in price with a probability significantly higher as they fall further to 0.25% at the February meeting.

“Indeed, the probability of a 0.5% rise in February fell from 54.9% to 34.2% after the CPI print. Beyond that, the terminal rate expected in May fell in the day and now stands at 4.86%.

The FTSE 100 index gained 0.8% on yesterday’s US inflation and is expected to maintain those gains this morning, with CMC Markets expecting performance broadly unchanged at 7500.


Inflation: which prices have increased the most?

The Office for National Statistics (ONS) said the slight slowdown in the rate of inflation was largely due to lower fuel prices after the cost of filling the car fell sharply.

However, food and drink prices continued to soar, rising 16.5%, the highest rate since September 1977. The inflation rate for food has risen for 16 consecutive months, against -0.6% in July 2021.

Here is an overview of the prices that have increased the most.

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