FTSE 100 Live 06 April: US interest rate rise fears stall markets, oil price higher

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FTSE firmly lower as Fed fears hit global stocks

The FTSE 100 is down about 55 points in afternoon trade, with about 40 minutes left of the trading day.

Packaging company Smurfit Kappa is stuck at the bottom of the index, down over 6%, with JD Sports not too far behind, down 5%. Six other stocks are down over 4%, showing the breadth of the sell-off.

Stock markets around the world are lower today as investors ramp up bets on a swift tightening of monetary policy in the US. It comes on the heels of comments from various Fed and regional Fed officials in recent days.

“Treasury yields surged yesterday after hawkish comments by Fed Governor Brainard, typically a dove,” said Jussi Hiljanen, a strategist at SEB. Ms Brainard said in her speech that she sees a need to move forcefully with rate hikes and predicts that QT [quantitive tightening] will start already in May and at a rapid pace. ”

That’s all from us on the blog today. Join us again tomorrow.

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Energy stocks up as oil CEOs face grilling: US markets open

The Nasdaq opened 1.9% lower, led by drops in tech stocks amid continued worries about chip shortages.

Energy stocks edged up 0.7%, as the CEOs of the world’s biggest oil companies, including Chevron and BP, gear up to appear before Congress for a grilling over rocketing gas prices.

Chevron recently posted record gross profits of $ 27 billion (£ 21 billion). Last month, President Joe Biden tweeted that oil and gas companies “should not pad their profits at the expense of hardworking Americans.”

The price of crude oil edged up 0.2%, while the dollar fell slightly on the Euro.

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European stocks down amid interest rate fears

European exchanges opened down across the board this morning as investors weighed rising inflationary pressure and the specter of higher interest rates set by the US Federal Reserve.

Amsterdam’s Euronext exchange was the worst performer today with a 2.4% fall, led by a 4% drop in its biggest single constituent, semiconductor maker ASML amid forecasts of a continued chip shortages.

The FTSE100 saw only a modest decline of 0.3%. Consumer discretionary stocks performed the worst in the UK, falling 1.4% amid concerns shoppers will drop luxury products in favor of essentials because of higher prices.

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Toscafund backs UK ‘InsurTech’ SPAC

Toscafund is backing a new SPAC hoping to buy a tech startup in the insurance space.

The London hedge fund is a cornerstone investor in Financials Acquisition Corp, which is aiming to raise £ 150 million through a London listing to pursue a deal. It will go after a so-called “InsurTech” startup. CEO William Allen said it was “the right time to bring these next generation companies to the public market.”

Financials Acquisition is one of the few special purpose acquisition companies – known as SPACs – to seek a listing in London. SPACs exploded in popularity in the US in 2020, with hundreds of billions raised to target deals, but the boom has since turned to bust.

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Construction confidence sinks but orders hold steady

Orders in the construction sector have risen rapidly despite business optimism hitting a 17-month low, according to an S&P Global survey.

Commercial construction saw its highest growth rate since June 2021 last month, while expansion in residential work was more muted.

Lead times for construction projects increased amid greater supply difficulties and escalating commodity prices. Job creation in March was the lowest so far in 2022, the PMI survey found.

Tim Moore, economics director at S&P Global, said: “Intense inflationary pressures appear to have unnerved some construction companies due to concerns that clients will cut back spending.”

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Avon Protection slides 23%, FTSE 100 lower

A predicted surge in defense spending today provided little comfort for Avon Protection investors after another profit warning at the military headgear supplier.

Shares tumbled 23% – wiping out gains seen since the Ukraine war – as it warned that supply chain inefficiencies in its helmet business had slowed margin recovery progress.

Avon remains upbeat about longer-term prospects, particularly after a notable pick up in customer inquiries on the back of Ukraine events. It provides respiratory and head protection products for first responders as well as the world’s militaries.

Shares more than doubled to as high as 4500p during 2020 but the company lost its place in the FTSE 250 after a product testing failure at its body armor division.

The stock today fell 302p to 1020p but analysts at Jefferies and Peel Hunt remain supportive based on target prices of 1650p and 1500p.

Peel Hunt said: “This is clearly disappointing in the short term, but the demand backdrop remains undeniably positive.”

In the FTSE 100 index, a trading update from Imperial Brands helped shares to rally 3% as the cigarettes and vaping business forecast a 2% rise in first-half operating profits.

This was better than the 0.3% expected in the City as Bristol-based Imperial benefits from reduced losses in its next generation products division.

Shares rose 43.5p to 1659.5p but the wider FTSE 100 index fell 41.55 points to 7572.17 as traders fretted about the prospect of a rapid rise in US interest rates to combat inflation.

The FTSE 250 index fell 133.90 points to 21,223.08, with meat producer Hilton Food down 18p to 1204p despite reporting a 13% rise in annual profits to £ 67.2 million.

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Profits reach record high but bumpy road ahead for Lookers

Car dealership Lookers announced record profits but sounded a note of caution with war in Ukraine and high costs of living set to weigh on car sales.

The Manchester-based company’s return to profitability, which followed two years of successive losses, was driven by spurt in used cars sales, but the firm said semiconductor shortages, inflation and supply chain constraints would lead to significant cost pressures in 2022.

Sales of £ 4.1 billion remained 15% down on pre-pandemic levels.

Lookers CEO Mark Raban said: “The business and our customers face some uncertainties in 2022.

“The current crisis in Ukraine and significant cost of living increases will put pressure on consumer sentiment and disposable incomes.”

In a trading update, Lookers said it would prioritize expansion of its used car and repairs businesses as part of an updated company strategy.

It comes after statistics were released showing registrations of new cars in March fell to their lowest level since 1998. March is typically the biggest month in the year for the UK car market.

Lookers shares dropped 1.6% in early trading.

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VTB’s UK business set for administration

The UK arm of Russia’s second largest bank is set to collapse after sanctions made the business unviable.

VTB, which has an office flying the Russian flag opposite the Bank of England, was today poised to appoint administrators, Bloomberg reported.

The lender has investment banking operations in London and moved into its high-profile headquarters here in 2008.

The business lost $ 213 million in 2020, the most recent year accounts are available for, largely due to the impact of the pandemic.

The UK arm of Sberbank, Russia’s biggest bank, entered administration on Monday. Both have been hit by UK sanctions, which has made it impossible to continue operations. Banks have stopped dealing with both Russian lenders and trading in shares was suspended on the London Stock Exchange.

VTB could not be reached for comment.

The company has been cutting back on headcount and operations in London for the last few years as it moves focus towards Europe.

Elsewhere, London-listed events business the Hyve Group today announced a deal to sell its Russian business for £ 72 million. Management said the sale was motivated by “significant challenges from a moral, legal, compliance, and operational standpoint”. The division made sales of £ 17 million over the last six months.

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FTSE 100 steady, Imperial shares higher

Imperial Brands shares are 2% higher in the FTSE 100 index after the cigarettes and vaping business reassured on recent trading.

Among other stocks doing well, insurers Legal & General and Prudential rose 1% and housebuilder Berkeley lifted 2% after yesterday agreeing to sign the government’s cladding safety pledge.

Royal Mail and Scottish Mortgage Investment Trust shares were 2% lower, while the wider FTSE 100 index traded close to its opening mark at 7612.47. The FTSE 250 index improved 49.38 points to 21,406.36.

In the FTSE All-Share, Avon Protection shares slumped 11% after the military headgear supplier warned on profits despite a recent pick-up in inquiries since the start of the Ukraine war.

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More housebuilders sign safety pledge

More housebuilders have revealed they are to sign the government building safety pledge, meaning they will take responsibility for remediating fire safety issues of buildings developed over 11 meters tall in the last 30 years.

Redrow and MJ Gleeson are the latest signatories, following on from Crest Nicholson, Persimmon, Berkeley Group and Taylor Wimpey yesterday.

Redrow has taken an additional provision of £ 164 million to cover its pledge, which is on top of £ 36 million previously set aside for fire safety in high rise buildings.

It said: “We will work with leaseholders to remediate their buildings and, where possible, pursue recoveries from main contractors, warranty providers and other third parties.”

MJ Gleeson said it was involved in the development of 15 buildings over 11 meters before dedicating itself to low-cost house building and land promotion.

Chief executive James Thomson said: “Leaseholders should not have to pay for any costs associated with life-critical fire-safety issues and I support the Government’s efforts to engage the wider industry in remediating buildings made unsafe by life-critical fire-safety issues.

“The housebuilding sector has responded positively to this initiative and is playing a proactive role and at significant cost.”

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