FTSE 100 Live: Ofgem hikes energy price cap, sterling near $1.21

(Evening Standard)

Regulator Ofgem today revealed an increase in the energy price cap to £4279 for the first three months of 2023.

The annual figure based on an average dual fuel household paying by direct debit is up from £3549 currently, but consumers won’t have to pay the new level because of the Government’s Energy Price Guarantee. Wholesale costs now account for £3177 of a typical bill, up 28%.

In London, UK-focused stocks were higher today after sterling’s recent improvement against the US dollar continued.

City puts boot into Dr Martens

10:30 , Simon English

THE CITY put the boot in to Dr Martens shares today after warning from the iconic shoe maker that profit margins will fall unnerved investors.

Previously seen as a near recession proof business, half-year results out today suggest it is far from immune to wider economic pressures that have hurt nearly all retailers.

Dr Martens said direct-to-consumer sales – those from its own stores and websites – were “slower than anticipated” over the latest quarter.

Bosses at the firm said the “consumer environment weakened” as a whole over the half-year to September as customers faced surging household bills.

The shares, which floated at 370p in January 2021, today fell 56p, nearly 20%, to 230p.

Profit for the six months to September fell 5% to £58 million.

Chief executive Kenny Wilson said: “Although there are economic challenges ahead, we are well positioned for future growth.”

“The business is well set for Christmas,” he added.

Pound reclaims $1.21 as dollar makes broad retreat on signals of smaller US rate hikes

10:29 , Michael Hunter

Sterling was back above $1.21 for the first time since August as the dollar fell back across global markets following signals from the Federal Reserve that US rate rises could start to arrive in smaller steps.

The pound rose 0.4% for the day, adding to a rally overnight when the Washington-based central bank published the minutes of its last rate-setting meeting. They pointed to a softer rate rise in December, of 0.5%, after a run of 0.75% increases.

The rally took sterling to $1.2103, its highest level since the market turbulence stoked by the Truss government.

Francesco Pesole, an FX strategist at ING, the Dutch bank, said: “The Fed minutes surprised on the dovish side, signalling strong support for slower rate hikes. The dollar could stay pressured for a bit longer, but it’s probably embedding a good deal of Fed-related negatives now.”

The market moves also came on the Thanksgiving holiday in the US, which cuts trading volumes with New York dealing rooms closed.

Loft insulation sales soar at B&Q

10:27 , Simon English

B&Q owner Kingfisher is on the up as consumers splash out on energy savings products such as loft insulation and smart meters.

The DIY boom that grew during lockdown has faded somewhat, but there are now fresh reasons for people, especially those working from home, to head to B&Q stores.

Sales in the third quarter across the group that also owns Screwfix rose 1.7% to £3.3 billion, and there has been a strong start to the fourth quarter. Sales at B&Q in the last three months are up 13% to £935 million.

Chief executive Thierry Garnier said: “While the market backdrop remains challenging, DIY sales continue to be supported by new industry trends such as more working from home and a clear step-up in customer investment in energy saving and efficiency.”

Sales of loft insulation roll jumped 108% compared to a year ago, and that comes ahead of a planned government media campaign to encourage efficient energy use.

A public information campaign to persuade households to cut gas usage is to be unveiled shortly.

Emma Carr, a retail partner at the law firm Gowling WLG, said: “While the group’s reliance on the surge in sales resulting from people spending more on home renovations during lockdown has now dropped off, there is still significant market demand that can be tapped into – if the right supply chain and customer targeting processes are put in place.

“The cost of living crisis will be forcing many that might have hired a tradesman previously to consider the DIY option as a cheaper alternative – recognising and more importantly capitalising on this dynamic will now be crucial for Kingfisher as it looks to assert its market dominance and work hard to claim a slice of the consumer demand still very much in existence.”

The company reduced its profit guidance slightly due to wage inflation, “slightly higher” energy costs and investments in its Screwfix France opening plan.

The company said it is “managing inflationary pressures effectively” but that it now expects a profit of between £730 million and £760 million.

It had previously told investors that profits could be as high as £770 million.

The shares fell 3p to 250p.

FTSE 250 up 0.7%, sterling near $1.21

10:11 , Graeme Evans

Demand for UK-focused stocks continued today as housebuilders extended their recovery and the FTSE 250 index outperformed London’s top flight.

Home interest was boosted by the sight of sterling near to $1.21, a level not seen in over three months after the dollar stalled on more signs that the Federal Reserve is close to slowing interest rate hikes.

The Fed Funds rate stands at 3.75%-4% after this month’s latest 0.75% hike, but minutes from that meeting yesterday fuelled expectations for a 0.5% rise in December and an eventual peak of 5%.

Last week’s Autumn Statement has also removed some uncertainty for the UK economy, helping the pound rally 13% since September’s mini-budget.

The improved sentiment has benefited housebuilders, with Taylor Wimpey extending gains for the past month to 16% after today’s rise of 2.2p to 106.2p. Barratt Developments also gained 8.1p to 411.8p, leaving it 14% higher in a month.

Dollar weakness dented overseas-earning stocks in the FTSE 100 index, which edged up 2.65 points to 7467.59 in a performance lagging the moves seen in Europe.

Declines of 3% for Vodafone and Imperial Brands as their shares traded without recent dividend awards added to the pressure.

The UK-focused FTSE 250 index was much stronger after improving 0.7% or 142.37 points to 19,642.87, its highest level since August. Property investment firms benefited from a further softening in UK bond yields, with big risers including LondonMetric Property after a gain of 7.9p to 193.5p.

On AIM, shares in Michelmersh Brick jumped 8p to 86.5p as investors cheered three separate announcements.

As well as forecasting better-than-expected full-year results, the owner of several UK premium brick brands is to buy back up to £3 million of its shares and acquire the building products firm Fabspeed for an initial £6.25 million.

FTSE 100 lags, Centrica shares up 1%

09:03 , Graeme Evans

The FTSE 100 index is down 9.59 points at 7455.65, a performance that lags behind benchmarks in Europe this morning.

Today’s closure of US markets for the Thanksgiving holiday has been one factor keeping London investors on the sidelines.

British Gas owner Centrica is 1.1p higher at 95.8p after Ofgem highlighted further upward moves in energy bills by announcing that its price cap would have risen to £4279 without continued government support.

Other UK-focused stocks also fared well as sterling consolidated its position above $1.20. RIsers included mortgage lender NatWest, which lifted 3.2p to 257.5p, and housebuilder Persimmon after a gain of 13.5p to 1328p.

The FTSE 250 index stands 111.34 points higher at 19,611.84, led by a rise of 4% or 20.6p to 478.2p for Workspace after analysts at Barclays raised their recommendation on the offices business stock to “overweight”.

Jet2 profits soar to hit new record

07:53 , Simon Hunt

Profits at budget airline Jet2 soared to reach a record high of £451 million in the six months to September, amid a boom in package holidays fuelled by pent-up demand over the Covid era.

Sales jumped 730% to £3.6 billion, while seat capacity increased 14% against pre-pandemic levels. Jet2 was the only UK airline not to cancel flights during July and August, the firm said.

Executive Chairman Philip Meeson said: “Our Leisure Travel business has continued its encouraging recovery following the reopening of international travel in early 2022.

“Strong customer demand, in particular for package holidays, plus a robust pricing environment and considered cost control, have underpinned a substantially improved financial performance compared to recent Covid impacted summer seasons, but also against pre-Covid Summer 2019.”

Kingfisher says offer of energy-saving help at B&Q helps demand stay ‘resilient’

07:43 , Michael Hunter

The owner of the B&Q home DIY chain, Kingfisher, has said its service offering customers tips on how to make their homes more energy efficient has been popuar as third quarter demand stayed “resilient”.

The company said there were almost 1,000 appointments made for consultations in B&Q within the first three days of launch, take up it said was “very positive”.

Like-for-like sales in the third quarter rose almost 2% to £3.3bn, “significantly ahead” of pre-pandemic levels.

It also opened two of its Screwfix brand stores in France in the period, part of a “meaningful step-up in store roll-outs planned for 2023.”

Thierry Garnier, Chief Executive Officer, said: “Last month marked a key moment in our history with the opening of our first Screwfix store in France, with a total of four to five stores due to open this financial year and many more planned.”

Brent crude near $85, FTSE 100 set to weaken

07:43 , Graeme Evans

Brent crude remains near $85 a barrel after falling 4% yesterday on reports that G7 nations are considering a price cap on Russia crude at between $65 and $70 a barrel.

Demand fears have added to the price pressure, although elsewhere in financial markets there was relief at further signs from the Federal Reserve that policymakers are at the point of slowing the pace of interest rate rises.

The Fed increased its fund rates by another 0.75% to 3.75-4% earlier this month, but minutes from that meeting published yesterday have fuelled expectations for a 0.5% hike in December and an eventual peak of 5%.

Wall Street welcomed the update as the S&P 500 index rose 0.6% ahead of today’s Thanksgiving holiday. The FTSE 100 index added 0.2% last night to close at a two-month high, but CMC Markets expects London’s top flight to retreat 10 points to 7455 this morning.

Motorpoint barely turns a profit despite leap in sales

07:30 , Simon Hunt

Car retailer Motorpoint saw its pre-tax profits sink 78% to just £3 million in the six months to September despite a 30% boost to sales.

The firm sold just shy of 50,000 vehicles over the period, down 8% on the previous year.

Mark Carpenter, Chief Executive Officer of Motorpoint Group PLC said: “Profitability levels will be lower as we continue to invest in our strategic agenda.

“The investments made now will enable Motorpoint to emerge from the current macro environment in a stronger position as we seek to deliver sustained shareholder value.”