FTSE 100 Live 08 March: Gold above $2,000 an ounce, stagflation fears send shares lower – Evening Standard

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Domino’s pins hopes on deals

Domino’s Pizza boss Dominic Paul believes his firm can continue to entice customers in the face of rising inflation as it serves up national price cuts.

With inflation hitting a 25-year high in January, households are facing a cost of living crisis, but Paul says his firm’s revitalised ability to offer national deals to customers will support sales.

“We are landing a stronger value message as customers are feeling the pressure, and that gives us confidence that we can accelerate our growth,” he said.

Read the full story on the takeaway group’s full year results.

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Made.com says order waiting times are improving

Furniture retailer Made has promised to slash waiting times for its products in half as global shipping issues begin to improve.

The company, which has sought to attract design-savvy millennial customers with its modern, trendy furniture, said average wait times for its stock would be between three and four weeks by the end of June, having been seven to eight weeks during the height of the pandemic.

Freight rates spiked as shipping companies, logistics providers and ports struggled to keep up with a jump in trade volume in the wake of the coronavirus pandemic.

The rising costs hit Made’s margins, which in the 12 months to December 2021 stood at 46.3%, down from 53.2% a year earlier.

The company also deepened its losses, recording a pre-tax loss of £31.4 million thanks to costs associated with its flotation on the London Stock Exchange last year as well as the increased cost of shipping.

Read the full story.

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Shell ditches Russian oil

Oil giant Shell has announced a self-imposed ban on Russian oil and has apologised for buying a cargo last week after widespread criticism.

Shell will stop all spot purchases of Russian crude immediately and will not renew contracts, but said changing its supply chain could take weeks.

It will also shut service stations, aviation fuel and lubricants operations in Russia, and will ultimately phase out its involvement in all other Russian hydrocarbons.

CEO Ben van Beurden said: “We are acutely aware that our decision last week to purchase a cargo of Russian crude oil to be refined into products like petrol and diesel… was not the right one and we are sorry.”

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M&G continues share buyback trend

One of the top yielding stocks in the FTSE 100 brought cheer to an anxious City today by including a £500 million share buyback alongside its 2021 results.

The move by savings and investments business M&G, which demerged from Prudential in 2019, contributed to its shares surging by 12% to as high as 205.7p.

M&G follows the likes of Unilever, Shell and British American Tobacco as more bosses take advantage of lower valuations and strong balance sheets to buy back shares.

The practice puts money in the pockets of selling shareholders and pushes up the value of stock still in the market by restricting supply.

Combined with its latest dividend, M&G said the buyback meant it had now returned £1.8 billion of capital to shareholders, equivalent to 32% of its market valuation at the time of the demerger.

The company, which trades with a dividend yield of more than 10%, was not alone in turning on the buyback taps today.

Direct Line Insurance is targeting £100 million after its disciplined underwriting performance in 2021 also enabled the company to declare a 2.7% increase in its dividend.

Shares were initially higher but later stood 12.3p lower at 248.8p. Estate agency business Foxtons fared better, adding half a penny to 31.5p in the FTSE All-Share as it said it would buy back shares worth up to £3 million thanks to a strong balance sheet.

The buybacks came in a calmer session for the London market, with the FTSE 100 index down 14.88 points at 6944.60 and the FTSE 250 index up 129.29 points to 19,299.07.

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Capital & Regional narrows losses

Property company Capital & Regional, whose malls focus mainly on budget and convenience retailers, has begun to show signs of survival as its losses narrowed.

Results this morning showed pre-tax loss for the 2021 was £23.3 million, compared with a loss of £203.6 million the year before, when the company suffered a huge drop in the value of its property portfolio.

It also began to fill more of its shops with retailers and collected more of its rent, suggesting it is beginning to emerge from the effects of lockdowns and wider retail pain.

“For the first time in four years, we have had six months of stable valuations and this, supported by a marked increase in investment market activity as investors return to the sector, coupled with our robust income and occupancy performance, is cause for further optimism,” chief executive Lawrence Hutchings said.

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More on the extraordinary moves in the metal market

The London Metal Exchange was forced to halt trading of a key metal this morning after disorderly price rises threatened to derail the market.

The 145-year-old trading venue stopped nickel trading after what CEO Matthew Chamberlain called “unprecedented overnight increases” in price. The metal spiked more than 250% in two days.

The trading venue, where Nigel Farage worked before moving into politics, introduced special measures meant to curb soaring prices on Monday night but they were not enough.

Nickel briefly rose above $100,000 a ton this morning, more than doubling in what is the biggest price move in LME history. It pulled back to trade up 66% at $48,000 by the time trade was halted.

Read the full story.

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FTSE 100 improves, banking stocks recover

An unexpected break from selling pressure helped the FTSE 100 index to improve 32.7 points to 6992, while the FTSE 250 index jumped almost 1% to 19,350.

Big rises in the top flight included wealth management business M&G, which surged 12% after annual results included plans for a £500 million shares buyback.

There were also recoveries of 6% and 4% for Royal Mail and ITV shares, while banking giants NatWest and Lloyds improved 3% after Monday’s heavy losses.

Serviced offices business IWG jumped 14% in the FTSE 250 index as its annual results highlighted strong momentum at the start of 2022. Peru-based precious metals business Hochschild Mining lifted 7% after the gold price went over $2,000 an ounce.

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GDP impact as fuel and energy prices spiral

Economic forecasts continue to be rewritten as commodity prices surge and fears grow about the squeeze on household spending.

Paul Dales, chief UK economist at Capital Economics, believes a rise in petrol prices from £1.52 a litre to almost £1.80 a litre and next month’s 54% increase in the utility price cap will raise CPI inflation from 5.5% in January to a peak of 8.3% in April.

In response to sharp rises in agricultural commodity prices such as wheat, the London-based consultancy now thinks that inflation will finish the year much higher-than-expected at 6.6%.

The impact on household budgets means Dales now sees GDP growth this year of 3.7%, down from 4%, and 2.4% for 2023 compared with 3% seen previously.

An alternative “worst-case” scenario, where there is a blanket ban on energy imports from Russia and oil and natural gas prices rise even further and stay higher for even longer, means CPI inflation peaks at 8.6% in April as petrol prices rise to above £2 a litre.

In both cases, Dales notes that Chancellor Rishi Sunak has room to boost borrowing in order offset the resulting squeeze on households’ real disposable incomes.

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Gold above $2,000 an ounce, FTSE 100 lower

More big swings in commodity prices are set to mean further volatility for European stock markets today, with the FTSE 100 index forecast to open 90 points lower.

The latest downward lurch for London’s top flight comes as stagflation fears are fuelled by oil prices at their highest level since 2008 and wheat already at a record high.

In addition, nickel prices jumped sharply in Asian trading overnight amid the potential for supply disruption from Russia, which is the world’s third largest producer of the key component in electric vehicle batteries.

Gold also stood above $2,000 an ounce for the first time since the summer of 2020 as the geopolitical worries encouraged investors into safe haven assets.

This flight from risk contributed to the S&P 500 enduring its worst daily loss since October 2020 and its lowest close since June.

The FTSE 100 index closed 0.4% lower last night but this masked a wild session after initially falling nearly 3% on fears about the economic impact of soaring prices.

Brent crude had earlier peaked at $139 a barrel and natural gas surged to fresh records after the US said it was considering a potential ban on Russia oil exports. The Brent price today settled at about $127 a barrel, having been about $90 a barrel prior to the Ukraine invasion.

With Russia hinting that it may limit energy flows through the Nordstream One pipeline in retaliation for any oil export ban, CMC Markets is forecasting that the FTSE 100 index will fall 90 points to 6869.