FTSE 100 Live: US inflation falls to 8.5%, Elon Musk sells Tesla shares

·10 min read
 (Evening Standard)
(Evening Standard)

US inflation fell back from 9.1% to rest at 8.5% last month still critical for the economy but dropping from the four-decade peak it hit in June and calming the markets.

Last night, Elon Musk revealed the sale of $6.9 billion of Tesla shares as part of a fundraising move in case a court forces the tycoon to complete his acquisition of Twitter.

FTSE 100 Live Wednesday

  • Royal Mail warns over strike impact

  • Prudential shares struggle after results

  • US inflation falls more than expected

Stocks make gains as inflation fears wane: US markets open

Wednesday 10 August 2022 15:05 , Simon Hunt

Stocks made gains in the opening minutes of trading in New York after US inflation levels fell further than analysts expected, ending four consecutive days of losses for the S&P 500.

The softer inflation numbers came as welcome news to retailers like Target and Costco, which saw their share prices grow 3.6% and 1.5% respectively.

Some investors are now speculating the US Federal Reserve will proceed with a smaller-than-expected rate rise when it next meets. That may prove not to be true, however, as the Fed remains way behind on its inflation target.

Richard Carter, head of fixed interest research at Quilter Cheviot, said:“Investors will be hoping that this is the beginning of the end for this inflationary period and that it is the start of a downward trend in CPI.

“It may be too early to declare victory yet as much of it will depend on the outlook for energy costs, but this is very much a step in the right direction.“

US inflation lands lower than expected calming markets

Wednesday 10 August 2022 14:49 , Simon Hunt

US inflation fell back from 9.1% to rest at 8.5% last month still critical for the economy but dropping from the four-decade peak it hit in June and calming the markets.

The announcement of the economic data for July should cool the markets that have been dreading an increase in the Consumer Price Index (CPI) and take pressure off the Federal Bank that raised the US base interest rate by 0.75 percentage points at the end of last month to a range of 2.25%-2.5%, in reaction to the inflation peak.

Today’s drop has been heavily influenced by petrol prices that have dropped sharply in America after jumping a national average of $5 (£4.08) a gallon in mid-June.

These prices have no fallen to a little more than $4 a gallon and increase of $1 from this time last year, according to US motoring industry body AAA.

Deliveroo skids £147m into red as customers back-pedal on order size

Wednesday 10 August 2022 12:40 , Simon Hunt

Pre-tax losses at takeaway app Deliveroo have shot up to £147 million as hard pressed customers start to feel the impact of inflationary pressures.

Revenue in the first half of 2022 climbed 12% to top £1 billion for the first time, but swelling order numbers were partially offset by a drop in order sizes.

Deliveroo boss Will Shu told the Standard: “We’re taking market share in key markets.

“People are [still] ordering but they might order a cheaper item on the menu or maybe not order any drinks.” Average order size fell 3% from £22.70 to £22.10.

Growth in the second quarter of the year slowed to 2% from 12% in the first quarter, which Deliveroo said was a result of “the impact of increased consumer headwinds”. Last month, the company slashed its revenue forecasts to reflect the slowdown.

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Largest US crypto platform loses $1.1bn

Wednesday 10 August 2022 12:01 , Simon Hunt

The devastating fallout from the Bitcoin crash was laid bare last night after America’s biggest crypto exchange platform Coinbase posted a $1.1 billion (£905 million) quarterly loss.

Trading volumes at the exchange fell 30% in the second quarter, leading to a significant drop off in sales.

“The current downturn came fast and furious,” Coinbase said in a statement.

It comes after German firm Nuri became the latest crypto exchange to file for insolvency citing “various negative developments in the crypto markets” and putting at risk as much as €100 million of customer deposits. The company said it would continue to allow customer withdrawals, adding “for the time being, nothing will change”.

The Bitcoin price has dropped 46% since the start of the year, wiping more than £350 billion from its market cap.

Hostelworld halves losses as backpackers resume travels

Wednesday 10 August 2022 11:22 , Simon Hunt

Losses at budget accommodation provider Hostelworld halved in the first half of the year after a “strong recovery” in travel bookings.

The business reported an adjusted loss of €5.2 million (£4.4 million) against €9.7 million in the first six months of 2021.

Net revenue came in at €28 million, an increase of 866% encouraged by “pent up demand” as pandemic travel curbs eased, as bookings rose to 2.1 million from 300,000 a year earlier.

The business also announced that bookings had reached 59% of the equivalent 2019 pre-pandemic levels and that the average price per stay had increased. In the most popular southern European markets bookings are now exceeding 2019 levels

Gary Morrison, boss of Hostelworld, said: “We are encouraged by the strong recovery we have seen in the first six months of the year across all demand segments and destinations, which demonstrate the ability of our business to capture pent-up demand as the travel market returns.

He added that he remained confident that the business’s “loyal customer base” had the “flexibility, the means and the desire to travel”.

Elon Musk sells $7 billion’s worth of Tesla shares ahead of Twitter court clash

Wednesday 10 August 2022 10:52 , Simon Hunt

Elon Musk has offloaded almost $7 billion (£5.8 billion) Tesla shares ahead of his multi-billion dollar court clash with Twitter after he bailed out of his $44 billion bid for the social media site.

Twitter is suing Musk in a dispute that could end with him being forced to make good on his offer, or pay a $1 billion break fee to his spurned suitor. The US court will have to decide if claims from Musk that Twitter misled him about the number of active accounts on the are sufficient grounds for him to walk away from the deal.

Musk is also countersuing Twitter, in an attempt to halt its lawsuit against him.

Results setback for Pru shares, FTSE 100 steady

Wednesday 10 August 2022 10:28 , Graeme Evans

Prudential shares remained under pressure today as the insurer’s much-heralded shift towards high-growth markets in Asia and Africa continues to frustrate investors.

Shares fell 1% or 6.8p to 982.4p as the Pru reported a 7% drop in half-year new business profit and said that operating conditions are likely to be challenging over the rest of the year, despite signs that Covid’s impact in many of its key markets had stabilised.

The Pru is now focused on the savings and investment markets of Asia and Africa, having demerged its operations in the UK and United States. But progress has been hampered by the long-term closure of the Hong Kong border and Covid lockdowns in major China cities.

Richard Hunter, head of markets at Interactive Investor, said: “Prudential is going through the mill at the moment, as reflected by a share price decline of 30% over the last year.

He added: “The main question for investors is now whether the bad news has been priced in and the longer term prospects remain intact as Prudential attempts to navigate these choppy waters.”

The stock topped 1500p in September only to fall as far as 881p by mid-May and has struggled to break the 1000p threshold since then. Analysts at UBS continue to have a price target of 1685p, noting the Pru’s strong growth prospects and considerable undervaluation versus Asia-focused rival AIA.

Pru’s lacklustre performance came during another resilient session for the FTSE 100 index, which edged up 1.34 points to 7489.49.

The FTSE 250 index rallied 85.85 points to 19,998.25, led by corporate merchandise firm 4imprint after shares jumped 16% on half-year results and “encouraging” recent trading.

Royal Mail fell 4p to 262.4p after it warned it will be “materially loss making” in 2022/23 if industrial action planned by the Communication Workers Union goes ahead on August 26 and 31 and September 8 and 9.

The company is losing a million pounds a day, with its pay offer worth up to 5.5% set to add more than half a million pounds a day to that figure. It wants to link some of any pay rise to business changes.

FTSE 100 lower, Aviva and Admiral higher

Wednesday 10 August 2022 08:31 , Graeme Evans

Shares in Aviva and Admiral are 4% and 6% higher respectively after the insurance comnpanies posted interim results today,

There was no such boost for Asia-focused Prudential, however, as its shares fell back 2% following its latest figures.

The FTSE 100 index declined 18.31 points to 7469.84, with other stocks on the blue-chip fallers board including JD Sports Fashion, Persimmon and Rightmove.

The FTSE 250 index weakened 59 points to 19,853.40, but TP ICAP and corporate merchandise firm 4imprint rallied 10% and 4% after their respective updates.

Royal Mail warns over strike impact

Wednesday 10 August 2022 08:23 , Graeme Evans

Royal Mail today warned it will be “materially loss making” in 2022/23 if industrial action planned by the Communication Workers Union goes ahead on August 26 and 31 and September 8 and 9.

The company said it has offered an unconditional 2% pay increase backdated to 1 April, with a further 3.5% subject to agreement on business changes.

Last month, the company announced it was losing a million pounds a day and that the proposed pay deal would add more than half a million pounds a day to that figure.

In a statement today, Royal Mail said: “In more than three months of talks, CWU has failed to engage meaningfully on the business changes required.

“The negative commercial impact of any strike action will only make pay rises less affordable and could put jobs at risk.”

After announcing the strike action, CWU general secretary Dave Ward said that Royal Mail workers deserved a “dignified, proper pay rise”.

Royal Mail shares fell 4.1p to 262.3p.

US inflation in focus, FTSE 100 steady

Wednesday 10 August 2022 08:00 , Graeme Evans

Investors will be hoping today’s US inflation reading for July marks the start of a decline in the annual rate, having peaked at 9.1% in June.

Forecasts suggest a figure of 8.7%, but Wall Street will also be looking for any signs that price pressures have become entrenched in the US economy.

The core inflation figure, which excludes energy costs, has posted three consecutive monthly declines since its peak in March but is forecast to move up to 6.1%.

A bigger-than-expected move in either direction is likely to have an impact on expectations for US interest rates, which currently stand in the region of 2.5%.

Another increase of 0.75% is forecast in September, but the increased threat of recession means Wall Street sees a slowing in the pace of rate rises after that.

China earlier revealed an inflation rate at a two-year high of 2.7% but this was below forecasts for a figure of 2.9%. Producer prices were lower than expected after a 4.2% year-on-year increase, easing fears about underlying inflation pressures.

Ahead of the US inflation figure, Wall Street futures are little changed after the Nasdaq fell 1.2% yesterday on the back of cautious updates from leading technology firms.

The FTSE 100 is poised to open 10 points lower at 7478, according to CMC Markets.