Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
The following is a summary of top news stories Tuesday.
----------
COMPANIES
----------
Online grocer Ocado said it successfully completed a new fundraise. Ocado said it raised the funds to expedite growth plans, amid what it called surging online grocery demand in the wake of the Covid-19 pandemic and the need to bring new technology solutions to the market faster. Ocado placed 72.3 million new shares at 795 pence each, raising £575 million. The placing price was a 9.4% discount to Monday's market close of 877.6p. The stock was down 5.0% at 834.00p on Tuesday. The placing, led by Goldman Sachs, was done in conjunction with an offer to retail investors and subscription shares taken by senior managers, including Chief Executive Officer Tim Steiner. The total equity raise was £578 million, and the new shares represent about 9.7% of Ocado's total prior to the raise. Ocado also said it has agreed a £300 million revolving credit facility, provided by a syndicate of banks. In Ocado's most recent financial year, financial 2021, its pretax loss widened to £176.9 million from £52.3 million the year before.
----------
UK supermarket sales were lifted by Platinum Jubilee festivities in June, despite inflation reaching the highest level since April 2009. According to the latest survey by Kantar, UK grocery sales fell by 1.9% to £30.19 billion over the last 12 weeks to June 12 from the same period a year before. This was the best performance since October of last year. In the last four weeks, Kantar recorded growth of 0.4% year-on-year in supermarket sales. Inflation continued accelerating, however, reaching 6.7% for the 12 week period. This was higher than the 5.7% for the 12 weeks to May 15. In the last month, grocery inflation hit 8.3% - the highest level since April 2009. Tesco outperformed the sector average, with a sales decline of only 1.1% to £8.25 billion over the 12 week period, and market share edging up slightly to 27.3% from 27.1% a year prior. J Sainsbury's sales fell 3.9% to £4.48 billion during the period, as market share decreased slightly to 14.9% from 15.2%. Ocado sales fell 2.3% to £535 million, as it retained a 1.8% market share.
----------
DS Smith said it has seen good early momentum in the start of its current financial year, despite a more-challenging backdrop. For financial 2023, DS Smith expects corrugated box volume growth in a range of 2% to 4%. It plans to increase capital expenditure to £500 million to invest in ‘customer-led growth opportunities’. Chief Executive Officer Miles Roberts said: ‘It has been another year of volatile trading conditions where we have worked through the tail-end of the pandemic and, more recently, the tragic events of the Russian invasion of Ukraine. ’The new financial year has started well, building on the momentum from the previous year. Whilst there remains considerable uncertainty about the overall economic environment, our expectations remain unchanged. Strong customer demand reinforces our confidence to invest in the business, with capital expenditure expected to further increase in the current year.‘
----------
easyJet said it is buying 56 A320 neo family aircraft, worth $6.5 billion at list prices, from Airbus. The delivery is expected between easyJet's financial years 2026 and 2029. The Luton Airport-based firm said the purchase was helped by a 2013 agreement with Airbus. This enables easyJet to ’continue to benefit from the highly competitive pricing and the flexibility rights in this agreement‘, it explained. Airbus also will convert 18 A320neo family aircraft to A321neo aircraft for easyJet. The main difference is seat capacity. A320neos generally have 186 seats while A321neos have a capacity of 235 seats. EasyJet expects the converted aircraft to be delivered between financial 2024 and 2027.
----------
Mondelez International will acquire US energy bar maker Clif Bar & Co for $2.9 billion. The Chicago, Illinois-based food and beverage company said the acquisition will expand its global snack bar business to more than $1 billion, as well as accelerate the reshaping of its portfolio to ’sustain higher long-term growth‘. It is expected to be top-line accretive in year two. Mondelez will continue to operate the Clif Bar business from its headquarters in Emeryville, California. The company will also continue to manufacture its products in its facilities in Twin Falls, Idaho, and Indianapolis, Indiana.
----------
MARKETS
----------
US investors were returning after a long holiday weekend in a more optimistic mood, with stock market indices pointed to open around 2% higher. Asian and European markets also traded positively on Tuesday, with the FTSE 100 index trailing peers, weighed down by Ocado. ’With equity returns essentially bimodal and largely recession-dependent, today's calm would suggest that investors believe front-loaded monetary policy will be just that giving scope for the looser policy later in the year if demand conditions subside,‘ commented Stephen Innes at SPI Asset Managment.
----------
CAC 40: up 1.7% at 6,021.04
DAX 40: up 1.2% at 13,419.55
FTSE 100: up 0.8% at 7,176.87
----------
Hang Seng: closed up 1.9% at 21,559.59
Nikkei 225: closed up 1.8% at 26,246.31
S&P/ASX 200: closed up 1.4% at 6,523.80
----------
DJIA: called up 1.7%
S&P 500: called up 1.9%
Nasdaq Composite: called up 2.1%
----------
EUR: up at $1.0575 ($1.0528)
GBP: up at $1.2315 ($1.2246)
USD: up at JP¥135.30 (JP¥135.03)
Gold: soft at $1,836.84 per ounce ($1,838.66)
Oil (Brent): up at $115.32 a barrel ($113.70)
(currency and commodities changes since previous London equities close)
----------
ECONOMICS AND GENERAL
----------
UK Prime Minister Boris Johnson prepared the public to be braced for more chaos on the railways as he stressed the need for modernisation and reform in the industry. He warned commuters they must be ready to ’stay the course‘ and urged rail bosses and unions to agree on a package to safeguard the future of the industry. Johnson told Cabinet that, without fundamental changes to the way the system operates, rail firms risk going bust and passengers face ever-higher prices that could ultimately lead to them abandoning train travel. He was speaking as passengers faced chaos on Tuesday during the biggest rail strike in a generation, with further rounds of industrial action due on Thursday and Saturday. Johnson called for the ’union barons to sit down with Network Rail and the train companies‘ and agree to a package of reforms. Around 40,000 members of the Rail, Maritime & Transport union at Network Rail and 13 train operators have walked out in a bitter dispute over pay, jobs and conditions.
----------
The Bank of England should lift interest rates in chunkier instalments as a flailing pound is heaping more inflationary pressure on the UK, a policymaker said. Catherine Mann was one of three members of the BoE's nine-strong Monetary Policy Committee to vote for a 50 basis point rate increase at last week's meeting. In the end, the BoE voted to raise the Bank Rate by a quarter-point to 1.25%. Mann said on Monday: ’I voted for a 50 basis point increase at the last MPC meeting. In my view, a more robust policy move, based on both domestic conjuncture and commensurate with the global factor, reduces the risk that domestic inflation already embedded is further boosted by inflation imported via a sterling depreciation.‘
----------
The US is in talks with allies to further restrict Russia's oil revenue by capping the price it would get for its crude, US Treasury Secretary Janet Yellen said during a visit to Canada on Monday. ’We are continuing to have productive conversations with our partners and allies around the world on how to further restrict energy revenues to Russia, while preventing spillover effects to the global economy,‘ Yellen told a news conference. ’We are talking about price caps or a price exception that would enhance and strengthen recent and proposed energy restrictions [imposed by the US and allies]...that would push down the price of Russian oil and depress Putin's revenues while allowing more oil supply to reach the global market,‘ she said. A price cap, she explained, would ’prevent spillover effects to low income and developing countries that are struggling with high costs of food and energy.‘
----------
French President Emmanuel Macron rejected a resignation offer from his prime minister ahead of talks with the opposition seeking to end the deadlock sparked by his failure to secure a majority in parliamentary elections. Macron was due to host far-right leader Marine Le Pen and other political party chiefs for rare talks at the Elysee as he seeks solutions to an unprecedented situation that risks plunging his second term into crisis two months after it began. The Elysee said French Prime Minister Elisabeth Borne, blamed by some analysts for heading a lacklustre campaign, had offered her resignation to Macron but the head of state turned it down. Macron believes the government needs to ’stay on task and act‘ and the president will now seek ’constructive solutions‘ to the political deadlock in talks with opposition parties, said a presidential official, who asked not to be named.
----------
A resounding win by Spain's conservative Popular Party in a weekend regional election in Andalusia appears to have boosted its chances in national elections next year and weakened Socialist Prime Minister Pedro Sanchez. The Popular Party secured 58 seats in Sunday's election in Spain's most populous region three more than the 55 needed for an absolute majority. That constitutes its best-ever result in the long-standing Socialist stronghold. The Socialists won 30 seats, their worst-ever result in Andalusia. It governed there without interruption between 1982 and 2018, when it was ousted from power by a coalition between the PP and centre-right Ciudadanos.
----------
Copyright 2022 Alliance News Limited. All Rights Reserved.