FTSE 100 closes down 26 points to 7,047: evening FTSE close
The FTSE 100 closed down 26 points at 7,047 this evening, after results from Natwest raised concerns about wider problems in the banking sector.
NatWest today recorded an “impairment charge” of £242m for the past three months alone. That compares favorably with Barclays’ £381m, Lloyds Bank’s £668m and HSBC’s £930m but remains a clear sign of looming distress.
The news sent Natwest shares down 9% and the wider banking shares by just over 2%.
Airtel Africa had a better day today. Its shares plunged more than 15% yesterday after it reported a 9.1% drop in pre-tax profit, but shares recovered about 6% today, paring some of the losses.
US Stocks Open Lower After Disappointing Tech Gains: Wall Street Opens
US stocks fell in the opening minutes of trading in New York after disappointing earnings numbers from Amazon and Apple dampened hopes for strong sales during the holiday quarter.
The Nasdaq fell 26 points to 10,766, while the S&P was unchanged and the Dow rose around 0.5%.
Shares in Amazon fell 10% after the tech giant said profits would fall amid rising labor and delivery costs.
The company has forecast fourth-quarter net sales of between $140 billion and $148 billion, well below analyst expectations of $155 billion, according to Refinitiv data. Third-quarter net sales of $127 billion were also slightly below market consensus.
Matt Britzman, equities analyst at Hargreaves Lansdown, said: “Q3 results for Amazon were largely disappointing across the board, with the biggest concern for investors likely to come from guidance for the fourth quarter, traditionally the most important period of the year for e trade.
“It’s clear that Amazon went too big too soon on its expansion plans and it’s had to hit the brakes and then some to try to get costs back under control.”
Exxon beats profit estimates but revenue falls short
The energy giant joined Chevron in smashing its earnings estimates today, with third-quarter earnings per share of $4.45, well above analysts’ expectations of $3.79.
Revenue for the quarter rose more than 50% to $112 billion, which was roughly $3 billion short of market forecasts.
That means Exxon and Chevron made combined profits of about $30 billion in the three months to September — or the equivalent of about $1 billion every three days.
Four hours into today’s trading session, here’s a look at some of the price action on the FTSE 100.
The index is down 31 points to 7,042. Banks lead the losses, after NatWest today recorded an “impairment charge” of £242 million for the past three months alone. That compares favorably with Barclays’ £381m, Lloyds Bank’s £668m and HSBC’s £930m but remains a clear sign of looming distress.
Shares in Glencore also fell today after it cut annual production guidance for some commodities, blaming factors such as extreme weather in Australia and industrial action at a nickel mine in Canada.
Chevron’s profits exceed $11 billion as oil and gas production hits record highs
Energy giant Chevron beat analysts’ estimates to post its second-highest quarterly profit on record, amid a surge in demand for oil and gas.
The company posted a net profit for the third quarter of $11.2bn (£9.6bn). Earnings per share were $5.78, almost a dollar above market expectations.
“We delivered another quarter of strong financial performance,” said Chevron CEO Michael Wirth, adding that oil and gas production hit “another quarterly record.”
French slowdown raises fears of an EU-wide recession
Figures from France’s slowing economy today did little to ease fears that Europe will slide into recession this winter. The eurozone’s second-largest economy reported growth of 0.2% in the third quarter, down from 0.5% in the previous three months.
Germany’s flash GDP figure showed modest growth of 0.3%, up from just 0.1% previously and slightly above market expectations.
France’s results were in line with forecasts but economists are poised for flat developments in the current quarter as inflation and rising interest rates pressure spending.
The European Central Bank yesterday doubled its main deposit rate to 1.5%, and policymakers warned that more hikes are on the way to fight inflation.
On an annual basis, France’s statistics agency said GDP rose 1% in the third quarter compared with 4.2% growth in the second quarter.
Glencore production guidance hits shares, FTSE 100 lower
Glencore shares fell 3% today after it cut annual production guidance for some commodities, blaming factors such as extreme weather in Australia and industrial action at a nickel mine in Canada.
The stock was 13.6p lower at 487.4p and Rio Tinto fell 3% or 155p to 4509p as the FTSE 100 index fell 55.70 points to 7017.99.
Mining valuations have been under pressure in recent days, driven by concerns over the demand outlook in China and after a weak reaction to recent production reports, including from De Beers owner Anglo American yesterday.
Glencore reported a big quarterly drop in copper output as it cut annual guidance for several commodities, including coal due to severe flooding in New South Wales.
Zinc production forecasts have also been hit by supply chain problems in Kazakhstan stemming from the war in Ukraine, with nickel lower due to a recent 15-week strike at its mining complex in northern Quebec. However, Glencore’s giant marketing business is expected to deliver an above-average performance in the second half of the year.
The selling pressure for miners came as investors retreated to the sidelines, shaken by Amazon’s poor earnings numbers and nerves ahead of next week’s UK and US interest rate decisions.
More big hikes are expected, in stark contrast to today’s decision by the Bank of Japan to keep its short-term key rate at minus 0.1%
Amazon’s update hit consumer-focused shares, with transatlantic retailer JD Sports Fashion 3% lower, off 2.7p to 98.8p.
In the FTSE 250 index, which fell 1.2% or 210.56 points to 17,871.36, ASOS fell 30.5p to 615.5p and consumer magazine publisher Future fell 67p to 1171p amid widespread selling in tech and growth stocks .
Insolvencies up 2%, bankruptcies up 4% in latest sign of economic trouble
Insolvencies rose 2% in the three months to September, government data showed, in the latest sign that the UK economy is heading into recession.
One in 405 adults became insolvent between 1 October 2021 and 30 September 2022, a 3% increase on the previous year, but the overall number was down slightly on the previous quarter.
Bankruptcies rose 4% from the previous quarter to 1,713, but were lower than 2021 levels. Insolvencies soared in the second half of 2021 as the government began withdrawing its emergency coronavirus support package for businesses.
NatWest boss: People are worried
BRITAIN’S top four lenders set aside £2.5bn this week to deal with bad debts, a clear sign bankers are bracing for a recession.
Today, NatWest recorded an ‘impairment charge’ of £242m for the past three months alone. That compares favorably with Barclays’ £381m, Lloyds Bank’s £668m and HSBC’s £930m but remains a clear sign of looming distress.
This £2.5 billion figure does not include write-offs from other major lenders, such as Spain’s Santander or Nationwide Building Society.
Fears of a house price crash of perhaps 30% are growing. That would leave many people in negative equity, just as they come to renegotiate mortgage deals at much higher rates when interest rates rise.
NatWest chief executive Alison Rose said the bank has carried out 600,000 financial health checks as it tries to be proactive in managing people’s finances.
“The levels of anxiety among people are high,” she told the Standard. “We’re not yet seeing mortgages going into areas, but we know people are very concerned.”
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Tech billionaires lose £50bn in week as profit figures disappoint
Four of the world’s richest tech billionaires have seen their fortunes drop by a combined £50bn in the past week as squeezed household incomes dampen consumer demand and skyrocketing labor costs hurt profit margins.
Meta founder Mark Zuckerberg’s fortune fell by £12bn after Meta shares fell 20% as investors reacted with disappointment to a 52% drop in net income to $4.4bn (£3.8bn) in the quarter to 30 September.
Google founders Larry Page and Sergei Brin lost a combined £20 billion after Google’s parent company Alphabet posted sales figures that were around $2 billion below analysts’ expectations.
Meanwhile, Jeff Bezos is set to lose around £22bn of his fortune today as Amazon shares fell 19% in after-market trading overnight, as the tech giant warned profits would fall in the fourth quarter amid rising labor and supply costs.
Matt Britzman, equity analyst at Hargreaves Lansdown, said “It’s clear Amazon went too big too early on its expansion plans and it’s had to put the brakes on and then some to try to get costs back under control.”
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