FTSE 100 Live: Consumer slowdown fears rock shares, Royal Mail results

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european markets are sharply lower after Wall Street tumbled amid the S&P 500’s worst session since June 2020.

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The US slide, which followed a profit warning from retailer Target, also left the Nasdaq 4.7% lower in a continuation of the recent heavy selling pressure.

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Today’s session in London featured results from Royal Mail, National Grid, low-cost airline easyjet and the Tesla and Amazon backer Scottish Mortgage Investment Trust.

Live updates

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Consumer confidence fears hit shares

Signs that US consumers have reined in spending on “big ticket” items triggered another exodus from shares today.

Tesco and B&Q owner Kingfisher were among stocks 4% lower in London as the FTSE 100 index tumbled 2% in response to a bleak session on Wall Street last night.

The S&P 500 is now facing its seventh consecutive weekly decline after this week’s poor updates from retail giants Target and Walmart sent the US benchmark 4% lower in its worst daily performance since June 2020.

Target’s shares were 25% lower as consumer caution on big ticket purchases of furniture and electronics was compounded by its warning that higher fuel prices and supply chain costs were also eating into margins.

Hargreaves Lansdown senior analyst Susannah Streeter said: “With consumer spending power expected to be eroded further through interest rate rises, the worry is that Target’s pain is a precursor for yet more struggles to come for retailers.”

The consumer confidence concerns left the FTSE 100 index 149.52 points lower at 7288.57.

Bunzl, whose outsourcing services are used by multiple retailers, slumped 5% or 159p to 2760p and investment firm 3i, which owns Benelux-based discount retailer Action, weakened 8% or 106p to 1218p.

Scottish Mortgage Investment Trust, the Tesla and Amazon backer whose results today showed a 13.1% decline in net asset value (NAV), was 5% or 37.2p lower at 751.2p. It urged investors to take a longer-term view of its performance, however, after pointing out that NAV is up 200% over five years.

The FTSE 250 index fell more than 2% or 373.91 points to 19,575.53, with recruitment firm Page down 7% and electronics business Currys off 6%.

Cyber ​​security firm Darktrace fell another 3.9p to 319.3p, despite a statement dismissing any connection between the company and the ongoing Autonomy civil action.

It also emerged today that Darktrace chief executive Poppy Gustafsson spent £100,000 on the company’s shares at a price of 336.5p, having seen the stock fall 15% yesterday.

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FTSE 100 down 1%, Royal Mail off 6%

The FTSE 100 index is down by more than 1% after US markets slumped last night on consumer confidence fears sparked by weak updates from retailers Target and Walmart.

Shares in Tesco and B&Q owner Kingfisher fell 4%, while consumer goods giant Unilever traded more than 2% lower.

Royal Mail was the biggest faller, declining 6% as annual results warning that 2023 guidance depended on striking a pay deal with unions broadly in line with the current offer. It pointed out that every 1% of pay equated to about £45 million of cost inflation.

Scottish Mortgage Investment Trust, the Tesla and Amazon backer whose annual results today showed a 13.1% decline in net asset value, was also 4% lower.

The FTSE 100 index fell 86.62 points to 7351.47, while the FTSE 250 index was down 1.4% or 278.73 points to 19,670.71.

Boiler repair company Homeserve surged 10% after its board backed a £4.1 billion takeover proposal from Canadian asset manager Brookfield, while low-cost airline easyJet was 2% higher following its interim results.

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Royal Mail transformation at a “crossroads”, profits rise

Royal Mail operating profits rose 6.5% to £707 million in the year to March 27, while share owning postal workers are poised to benefit as the final dividend increased to 13.3pa share for payment on September 6.

Despite the progress, the company warned that it needs to adapt to a post-pandemic world and that its transformation is at a crossroads. Royal Mail is currently in pay discussions with CWU amid the threat of potential industrial disruption.

Chief executive Simon Thompson said over 50% of parcels are now processed automatically, but more needs to be done in reinventing services for the digital age.

He told investors: “The need to accelerate the transformation of our business – particularly in delivery – has become more urgent.

“Our future is as a parcels business, so we need to adapt old ways of working designed for letters and do it much more quickly to a world increasingly dominated by parcels.

“The last two years has shown us all how quickly customer needs can change.

“Our focus now is to work at pace with our people and our trade unions to reinvent this British icon for the next generations, so that we can give our customers what they want, grow our business sustainably and deliver long-term job security for our great team. We have no time to waste.”

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Weak start for FTSE 100 after S&P 500 slides

The S&P 500 fell 4% in its worst session since June 2020 as US markets responded to weak updates from retailers Target and Walmart.

Amid fears over declining consumer confidence and the impact of inflation on corporate profit margins, the Dow Jones Industrial Average also slid 3.6% and the tech-focused Nasdaq lost 4.7% in the latest heavy sell-off on Wall Street.

Target lost a quarter of its value in the retailer’s worst session since 1987 after missing expectations for the most recent quarter and lowering profit forecasts due to cost pressures. Walmart, which issued a warning the previous day, fell 7%.

Deutsche Bank analyst Henry Allen said weak housing data also fed concerns that the US consumer might not be in as strong a position as previously thought.

He said: “That’s on top of all the other concerns of late that the global economy is heading in a stagflationary direction amidst various supply-chain issues, alongside the prospect that tighter central bank policy is going to further dent growth and risks tipping various economies into recession.”

The latest Wall Street downturn means traders in Europe are expecting a weak start, with CMC Markets forecasting a decline of 44 points to 7394. The top flight closed 80 points lower last night after a late sell-off in response to the US weakness.

The S&P 500 is now facing its seventh consecutive week in negative territory, the longest run of declines for the index since 2001. Yesterday’s session saw just eight constituents end the day higher, which is the lowest number since November.

And with recessionary concerns back in focus, bond markets rallied as investors sought out safe havens. Yields on 10 year US Treasuries were at 2.90% this morning.

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Credit: www.standard.co.uk /

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