- Blue chips up 32 points to 8,345
- JD Wetherspoon sales up
- Direct Line restates cost-cutting plans
9.11am: Hundreds of defence companies debanked by high street lenders
High street lenders have begun debanking hundreds of defence companies as they become more strict on their internal ethics policies, sparking fears that the UK’s national security may be at risk.
Santander and Lloyds closed the accounts of around 300 “public administration and defence” companies throughout last year, reports from the Telegraph revealed on Wednesday.
Other leading lenders failed to provide a breakdown of their debanking statistics, indicating the figure may be higher.
While some of the accounts were removed for prolonged inactivity, others were cut due to the ethical concerns surrounding working with a weapons company.
The findings have been met with backlash from both MPs and members of the defence industry.
Treasury Committee chairman Harriett Baldwin said: “We cannot have organisations in this country systematically debanking legitimate firms or industries because their board turns its nose up at their line of work. If their work is legal then they should be able to access a bank account.”
8.52am: The morning so far
As has been the running theme for a while now, the FTSE 100 index chalked up another record high this morning.
Blue chips surged 36 points to 8,350 in opening exchanges, following yesterday’s supersized 100-point rally.
No single constituent was responsible for this morning’s sustained momentum, with top risers including Informa, easyJet, Diageo, British Gas owner Centrica, DS SMith and HSBC.
On the company news front, FTSE 250-listed motor insurer Direct Line restated its £100 million cost-cutting spree in a first-quarter update that saw gross written premiums and associated fees for ongoing operations rising by 15% year on year.
Firm-wide in-force policies were 1.8% lower year on year, with the motor segment the main culprit due to “the continued repricing of the motor book”. Shares were down 2%.
JD Wetherspoon boss Tim Martin had a few things to be chipper about in the pub chain’s trading update, with like-for-like sales increasing 5.2% and year-to-date sales up 8.3%.
“The gods of fashion have smiled upon Guinness, previously consumed by blokes my age, but now widely adopted by younger generations,” exclaimed boss Tim Martin. The pub chain’s shares added 3.5%
Things weren’t so great at online fashion retailer Boohoo. Revenues decreased 17% to £1.46 billion in the 2024 financial year, leading to statutory losses before tax of £159.9 million compared to £90.7 million of losses in 2023.
Net debt multiplied from just £5.9 million to £95 million due to increases in capital expenditure and inventory purchases to facilitate US-based expansion. Shares were off 4.1%.
8.28am: Footsie marches higher
The FTSE 100 is on the move again today, adding another 35 points to hit a fresh all-time high of 8,348.
A diversity of blue chips are leading the charge, with Informa, easyJet, Diageo, British Gas owner Centrica and DS Smith at the top of the risers list.
8.17am: German production stalls
Industrial production stalled in Germany in March, dropping by 0.4% month on month from a 1.7% gain in February.
It marks a disappointing retreat for Europe’s largest economy, which has struggled to crawl out of a recession caused by surging energy and borrowing costs.
As much as the full batch of encouraging and more positive data over the last few weeks had been balm for the German economic soul, this morning’s industrial production data is a good reminder that a bottoming out does not automatically lead to a strong recovery,” said Carsten Brzeski, global head of macro at ING.
“In fact, demand for German industrial goods has not yet turned around and after an initial inventory correction at the turn of the year, the expected inventory reduction has stalled again.
“Also, capacity utilisation in German industry has been on a declining trend since the war in Ukraine started and industrial production is still some 8% below its pre-pandemic level.”
8.07am: JD Wetherspoon marches higher, ‘Gods of fashion’ smile upon Guinness
“The gods of fashion have smiled upon Guinness, previously consumed by blokes my age, but now widely adopted by younger generations.”
JD Wetherspoon boss Tim Martin had a few things to be chipper about in the pub chain’s trading update for the 13 weeks to 28 April.
Like-for-like sales increased 5.2%, despite the comparable period in 2023 containing a bank holiday weekend.
Year to date, sales are up 8.3%.
Alongside the newly trendy Guinness, Martin said traditional ales are picking up momentum, “with Abbot Ale, Ruddles Bitter and Doom Bar showing good growth, as indeed are ales from the many small and micro brewers with which we trade”.
Wetherspoon said it expects profits in the current financial year to be “towards the top of market expectations”.
Shares bounced 3.4% higher in opening exchanges.
7.46am: Direct Line restates £100mln cost-cutting plan in first-quarter update
Direct Line has published a first-quarter trading update that focused on the numbers rather than the takeover speculation that has engulfed the motor insurance firm this year.
Total gross written premium and associated fees for ongoing operations rose by 15% year on year in the first quarter.
Motor saw an 18.3% increase in premiums to £424.3 million, while the smaller home and commercial segments increased 14% and 15% respectively.
Motor claims trends and margins developed as expected, with estimated written margins maintained above 10%.
Firm-wide in-force policies were 1.8% lower year on year, with the motor segment the main culprit due to “the continued repricing of the motor book”.
Chief executive Adam Winslow reiterated his intention to bring costs down dramatically at the FTSE 250-listed group.
“We have announced a number of significant hires over the last few weeks. I am confident that with the new leadership team in place, we can deliver run-rate annualised cost savings of at least £100 million by the end of 2025 and a net insurance margin, normalised for weather, of 13% in 2026,” he stated.
7.29am: Losses, debt pile up for Boohoo
Online fashion retailer Boohoo’s revenues decreased 17% to £1.46 billion in the 2024 financial year, leading to statutory losses before tax of £159.9 million compared to £90.7 million of losses in 2023.
All the while net debt multiplied from just £5.9 million to £95 million due to increases in capital expenditure and inventory purchases to facilitate US-based expansion.
Cash inflow was minimal at £100,000, significantly reduced from the previous year’s inflow of £130.9 million.
Chief executive John Lyttle attempted to redirect focus on forward opportunities for the group.
“We continue to take actions to deliver on our goal of bringing the entire group back to profitable growth,” he said.
“In FY24, we completed our investment cycle with the launch of our US distribution centre and the successful delivery of our Sheffield Automation project. Sheffield is already delivering significant efficiency improvements, which, together with the traction of Debenhams marketplace, is generating margin improvement across the group.
“We have also taken steps to transition several of our labels over onto Debenhams marketplace to drive enhanced profitability. This proved effective during the year and is something that will drive additional profitability going forward.
“These factors, combined with improving market conditions, give us strong confidence in our medium-term outlook.”
7.09am: Stocks to move higher after closing at record
The FTSE 100 is expected to gain 15 points to 8334 when markets open today after notching up a new record on Tuesday.
Blue chips flew a full 100 points yesterday as all but three of the top-30 constituents chalked up green candlesticks, thanks to optimism about interest rates coming down soon.
The Bank of England convenes tomorrow and while a cut is not widely expected, attention will be on forward guidance and messaging.
There is no major macroeconomic news today, barring used car prices in the US this afternoon.
On the company news front, Boohoo and JD Wetherspoon will soon have their earnings out, while Shopify, Airbnb Uber and Arm report in the US
Robert Johnson is a UK-based business writer specializing in finance and entrepreneurship. With an eye for market trends and a keen interest in the corporate world, he offers readers valuable insights into business developments.
