FTSE 100 lower; Moneysupermarket.com rises after RBC upgrade

FTSE 100 heads lower, down 40 points
BoE prepared to buy more gilts as deadline looms
DS Smith jumps 10% after raising guidance
10.54am: Moneysupermarket.com gains after RBC upgrade

Moneysupermarket.com powered 6.70% higher today to 193.20p as broker RBC Capital Market said it thinks the 20% de-rating since August represents a good entry point.

Upgrading the stock to outperform from sector perform the broker said the stock is now trading attractively at a free cash flow yield of 10%.

RBC forecast that the group’s core business should benefit from consumers increasingly looking to save on their monthly bills, making it a resilient play during the economic downturn.

RBS (LON:NWG) said it expects the company to deliver on expectations, which amid market downgrades, should drive relative stock outperformance.

The broker also upped its price target to 250p from 230p.

But on the downside a downgrade by JPMorgan (NYSE:JPM) Cazenove hit shares in RS Group PLC.

The broker cut its rating to neutral from outperform with a price target of 1050p saying the risk to reward was now more evenly balanced after its quarter two trading update.

Shares fell 3.3% to 948p.

Meanwhile the FTSE 100 has settled off earlier lows but still down 36 points at 6,955.

10.12am: Government to publish fiscal plan and OBR forecast on October 31

The chancellor, Kwasi Kwarteng has brought forward the date of his medium-term fiscal plan, to 31st October.

The chancellor announced the change in a letter to parliament’s Treasury Select committee.

Chancellor @KwasiKwarteng has announced that the Medium-Term Fiscal Plan will be published on 31 October & an @OBR_UK forecast has been commissioned for that date. pic.twitter.com/RoiNyhLmQA
— HM Treasury (@hmtreasury) October 10, 2022

The Office for Budget Responsibility’s independent economic forecasts will also be published that day.

9.55am: Government to ban solar farms on England’s farmland – Guardian

Ministers are planning to ban solar farms from most of England’s farmland, according to a report in the Guardian.

The new environment secretary, Ranil Jayawardena, is understood to oppose solar panels being placed on agricultural land, arguing that it impedes his programme of growth and boosting food production.

Government sources said he has asked his officials to redefine “best and most versatile” land (BMV), which is earmarked for farming, to include the middling-to-low category 3b.

Land is graded from 1 to 5, and currently BMV includes grades 1 to 3a. Planning guidance has said that development on BMV land should be avoided, although planning authorities may take other considerations into account.

9.40am: Retail sales growth slowed in September – BDO

Britain’s retailers in September saw their sales grow by the slowest rate since shops reopened after the end of Covid-19 lockdowns, as consumers cut spending in the face of rising energy costs and inflation.

Retail sales last month increased by 2.8% year-on-year, compared with a 3.6% rise in August, according to BDO’s High Street Sales Tracker.

“The actual performance for retailers may be even worse than these results suggest. With rising inflation, data suggests that the actual volume of sales is down significantly while it is higher prices that is driving the growth,” said Sophie Michael, BDO’s head of retail and wholesale.

Sales peaked at 4.9% in the second week of September and then fell to 1.3% in the third and fourth weeks.

Fashion sales rose 6.7%, while lifestyle sales increased by just 1.2%.

The homewares sector had a disappointing month with sales declining by 6.3%, reflecting belt-tightening by consumers after they spent significant sums improving their homes during the pandemic.

9.12am: Bonds open lower

Despite the Bank’s announcement, long-dated UK bond prices have opened a little lower.

The yield on 30-year UK government bonds have inched up to 4.45%, from 4.38% on Friday night.

Before the mini-budget, the 30-year gilt yield was around 3.8%, but it surged over 5% in the days after Kwasi Kwarteng’s statement, forcing the Bank to act.

9.00am: FTSE falls further

The FTSE 100 index extended its falls with reports of explosions in Ukraine adding to the nervous mood in London already dented by falls on Wall Street on Friday following the strong US jobs report, and in Asia overnight as chip stocks fell on news of new US export control measures aimed at slowing Beijing’s technological and military advances.

At 9.00am the lead index was down 47 points at 6,944 with the broader FTSE 250 down 164 points at 17,189.

In London, the Bank of England announced further liquidity measures as it seeks to ensure stability in the financial markets, doubling the size of its daily auctions ahead of the end of its emergency programme on Friday.

The Bank’s move today is telling the markets not to test its pledge to restore stability in the long-dated government bond market, according to Torsten Bell of the Resolution Foundation.

Former pensions minister, Steve Webb, said today’s move should reduce the risk of a “cliff edge” when the Bank’s bond-buying programme ends on Friday.

Neil Wilson at markets.com noted: “The Bank made it clear it will be the market maker of last resort, but we are not home and dry just yet.”

In reaction the pound was slightly lower, down 0.22%, against the US dollar at US$1.1070.

8.10am: FTSE 100 opens lower

FTSE 100 made a subdued start to the week reflecting heavy losses in the US on Friday and in Asia overnight.

At 8.10am London’s blue chip index was down 28 points at 6,962 while the broader FTSE 250 fell 115 points to 17,238.

Asian markets were hit by falls in semi-conductor stocks dented by new US export control measures aimed at slowing Beijing’s technological and military advances.

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown (LON:HRGV) said: “The US administration has ramped up its new strict rules on exports, which include a measure to prevent China using certain semi-conductor chips made anywhere in the world with US equipment.”

“This development is likely to put a further brake on the Chinese tech sector given the difficulties China has faced in attempting to develop its domestic semiconductor industry. It’s also likely to continue to weigh on chip makers Nvidia and AMD which were sideswiped on Friday by the ramp up in restrictions.,” she added.

In London, the Bank of England announced further liquidity measures as it seeks to ensure stability in the financial markets, doubling the size of its daily auctions ahead of the end of its emergency programme on Friday.

DS Smith PLC (LSE:SMDS) pleased the market as it raised its profit guidance for the year.

Shares rose 10% as the packaging company said it expects adjusted operating profit of £400mln in the six months to October 31, 2022, up 45% from £276mln a year earlier.

For the full year, its performance is “expected to be ahead of our previous expectations” the company said.

“I am very pleased with the performance in the year to date and the momentum in our business. We remain focussed on delivering for our customers and managing our costs in an inflationary environment,” DS Smith chief executive Miles Roberts said.

Shares in Unite Group PLC (LON:UTG) also bucked the market trend and rose 1.5% after it said it has sold more beds than expected for the current academic year, with 99% of beds sold for the current academic year, up from 94.1% in 2020-21, and above its forecast for 97%.

Unite noted that: “In addition, the group has significant waiting lists in many of its largest markets, where there remains a shortage of high-quality, purpose-built student accommodation close to university campuses.”

The group said it had seen rental growth of 3.5% for the academic year and expects further rental growth for 2023-24, targeting a climb in the range of 4.5% to 5.0%.

For 2022, Unite said it now expects adjusted earnings per share at the top end of 40p to 41p guidance.

7.38am: Bank of England ready to buy more gilts

The Bank of England (BoE) said today it was ready to increase the size of its daily purchases of government bonds to ensure sufficient capacity ahead of the end of its emergency programme to calm recent turmoil in the gilt market which is due to end on Friday.

It said the maximum size of each operation would be confirmed each morning and was set at up to £10 billion for Monday.

NEW:@bankofengland is doubling the size of its daily emergency auctions to buy long-dated govt bonds from £5bn to £10bn.
Also announces a new temporary special repo facility for banks affected by what’s happening in this corner of the pensions market pic.twitter.com/dJE7t97iq7

The central bank said last month that it would temporarily buy up to £5 billion a day of gilts in a bid to calm surging yields following a government mini-budget that spooked the markets.

So far, the BoE has bought far less than the minimum daily limit.

“To date, the bank has carried out 8 daily auctions, offering to buy up to 40 billion pounds, and has made around 5 billion pounds of bond purchases, As set out previously, all purchases will be unwound in a smooth and orderly fashion once risks to market functioning are judged to have subsided,” it said on Monday.

The BoE also said it would launch a temporary expanded collateral repo facility to help banks ease liquidity pressures facing their client funds caught up in the turmoil which threatened pension funds.

7.18am: Octopus Energy set to buy Bulb – Sky

Octopus Energy is close to clinching a takeover of rival Bulb in a deal that will crystallise up to £4bn of losses for British taxpayers, according to Sky News.

Sky said it has learnt that ministers at the Treasury and the Department for Business, Energy and Industrial Strategy (BEIS) have been told that a sale of Bulb’s 1.6m-strong customer base is now the optimal outcome.

Industry sources said this weekend that the government and Bulb’s special administrator, Teneo Financial Advisory, were preparing to sign a binding agreement to sell the company to Octopus Energy by the end of this month.

The transaction, which is said to have the backing of industry regulator Ofgem, would be targeted for completion in December, according to one of those insiders.

If completed, it would end nearly a year of uncertainty over the fate of Bulb, Britain’s seventh-largest residential power supplier at the point of its collapse.

7.00am: FTSE 100 seen lower

The FTSE 100 is expected to make a weak start to the week following heavy losses on Wall Street on Friday and in Asia overnight.

Spread betting companies are calling the lead index down by around 50 points.

On Friday, US indices were deep in the red after the latest jobs report highlighted tight labour conditions despite a slowdown in hiring, which could indicate the Fed will proceed with aggressive interest rate hikes.

At the close, the Dow Jones fell by 2.1% at 29,297 points, while S&P 500 had fallen by 2.8% at 3,640 points, and the Nasdaq Composite lost 3.8% at 10,652.

Meanwhile in Asia on Monday, stocks tumbled with Hong Kong’s Hang Seng leading the way as Chinese chip stocks listed in the City plunged following new export rules from the US.

In London, trading updates are expected from Unite Group PLC while the latest BRC retail sales data will give a further indication as to health of Britain’s high streets.