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Secret email from water boss to rivals
LIV Garfield, the boss of FTSE 100 water giant Severn Trent, is trying to bring a taskforce of utility bosses together with the Labour party in a bid to head off the threat of nationalisation.
In an email sent to other utility CEOs which she describes as “sensitive” and “highly confidential”, the £4 million a year Garfield asks them to join an “off-the-record roundtable” with Will Hutton, the Observer journalist best known for books critical of capitalism including The State We’re In.
Her move comes as water companies face the threat of being re-nationalised, decades after they were privatised as one of Margaret Thatcher’s free market reforms.
She writes: “Whilst it is clear Labour will not include nationalisation in its next manifesto, they are also not keen on entering into the election race championing the status quo. The leadership thinks there is room for improvement and, politically, there is significant pressure to ‘do something’ about utilities.”
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Banks in demand as FTSE 100 rallies, Drax 4% higher
Investors targeted heavily-sold stocks in the banking and housebuilding sectors today as the FTSE 100 index rose 23.16 points to 7494.85.
Blue-chip risers included NatWest with a gain of 2.2p to 237.5p and Persimmon following an improvement of 13p to 1031p.
JD Sports Fashion dropped 1.95p to 141.95p on the back of last night’s earnings miss by Nike, while the poor week for Rolls-Royce shares continued with a fall of 2.25p to 146.45p.
The pressure on the valuations of listed water companies also continued as Severn Trent and United Utilities lost just under 1%.
The FTSE 250 index rose 44.83 points to 18,315.56, led by Drax as shares in the biomass power business lifted 4% or 21.8p to 583.4p.
New boss to land at Heathrow
Heathrow airport has selected Thomas Woldbye, who currently leads Copenhagen Airport, as its new boss.
He replaces John Holland-Kaye, who surprisingly annoucned plans to quit in February.
Heathrow Chairman Lord Paul Deighton said: “After an extensive and rigorous review of candidates, the Heathrow Board is delighted to appoint Thomas Woldbye as the next Heathrow CEO.
“Leading Britain’s hub airport is one of the most important jobs in global aviation and the vacancy attracted the best calibre talent from across the world. Thomas’s achievements at Copenhagen not only mirror Heathrow’s long-term strategy, but his track record in successfully running a major airport and working closely with stakeholders to secure consensus and deliver positive results stood out in the selection process.”
Heathrow Airport has said passenger numbers jumped by more than a quarter in May after it was boosted by three bank holiday weekends (Steve Parsons/PA)
/ PA WireWoldbye said: “I am naturally excited and proud, as well as humbled, to have been chosen to lead what is arguably the most famous airport in the world on its future journey.
“I have personally experienced how the excellent team at Heathrow has successfully improved both the infrastructure and the service to passengers over the past years to create a strong platform for further success. Heathrow is an important engine for the British economy and inextricably linked to the success of London and the wider UK. I look forward to being part of charting the path for this iconic company. My ambition will be to make the airport even better for passengers, for airlines, the community and every part of the UK.”
Like Heathrow, Copenhagen Airport has dealt with strikes this year. Norwegian Airlines threatened to pull out of Denmark’s biggest air travel hub last month as industrial action led to cancellations.
Brent Crude set for first monthly rise of 2023
Brent Crude is broadly unchanged at $74.42 a barrel, meaning it is on course to rise more than 2% in June for its first monthly gain in 2023.
The increase come ahead of supply cuts by Saudi Arabia, which plans to reduce its output by one million barrels per day from 1 July.
The Saudi move has offset ongoing demand fears caused by the impact of central bank rate hikes, as well as still resilient Russian supply.
UBS Global Wealth Management continues to forecast Brent crude at $95 a barrel by the end of the year.
It said today: “While demand growth in OECD countries has been lacklustre in the first half, this has been more than offset by solid demand growth in China, India, and the Middle East.
“In fact, data shows oil consumption has only contracted a few times over the past five decades, and typically only in periods of extreme economic stress.”
Nike shares fall after earnings miss
NIke shares fell 4% in after-hours dealings last night after the sportswear giant’s fourth quarter earnings failed to meet Wall Street estimates.
That was despite revenues of $12.8 billion (£10.1 billion) for the three months to 31 May being 5% higher and better than the $12.6 billion forecast by analysts.
The gross margin for the fourth quarter decreased 140 basis points to 43.6% and the earnings per share figure of $0.66 came in just short of the predicted level.
Despite that disappointment, the company hailed a milestone year in which its full year reported revenues of $51.2 billion (£40.6 billion) were 16% higher when stripping out currency movements.
Chief financial officer Matthew Friend said: “We finished the year with mid-teens currency-neutral revenue growth and a healthy marketplace — setting the foundation for sustainable, profitable growth in FY24 and beyond.”
GDP figure adds to Wall Street H1 cheer, FTSE 100 seen higher
US markets posted a largely positive session after a big upward revision to America’s first quarter GDP print pointed to resilience at a time of rising interest rates.
The 2% annualised pace compared with a previous estimate of 1.3% and helped the Dow Jones Industrial Average to rise 0.8% and the S&P 500 by 0.45%.
The tech-focused Nasdaq Composite was flat as the robust GDP figure fuelled expectations that central banks will have to hold interest rates at restrictive levels for much longer than previously expected.
The Nasdaq is still up 30% so far this year, compared with a rise of 14.5% for the S&P 500 index.
Deutsche Bank strategist Jim Reid said: “The first half has mostly been a risk rebound from stressed levels in 2022 so the performance should be put in some perspective, but with AI giving things an added kicker.”
He adds that the performance for the rest of the year will depend on whether the US economy enters recession.
Reid added: “We still think it does in Q4 with risks that it gets delayed to Q1 rather than doesn’t happen. There’s a long, long way before you can be sure you’re out of the gravitational pull of the lag of aggressively tighter monetary policy over the last year or so.”
The FTSE 100 index is up by a more modest 1% this year, with CMC Markets expecting the final session of the half year will see London’s top flight opening 18 points higher at 7489.
Nationwide: Large-scale property sell-off is ‘uinlikely’
Nationwide’s chief economist, Robert Gardner, discussed the impact of recent and upcoming interest rate hikes on house prices. He said that he did not believe it would cause a major wave of selling that could cause house prices to plummet.
“Clearly this represents a significant increase, but those borrowers were stress tested at interest rates above those now prevailing in the market to ensure they could cope with such an increase,” Gardner said. “Moreover, incomes have been rising at a solid pace in recent years,” he said. “Lenders will also work with borrowers to provide assistance wherever possible.
“Therefore, providing the labour market and interest rates perform broadly as expected, we are unlikely to see the waves of forced selling which would probably be required to result in a more disorderly adjustment to the housing market. “
Nationwide: house prices hold firm despite mortgage chaos
Avergae house prices ticked up in June compared to May, but were down again year-on-year, according to Nationwide.
The average house price was £262,239, up from May’s £260,736.
That comes despite chaos in the mortgage market during the month, as interest rates soared. Two-year fixed-rate deals leapt from 5.49% at the start of the month to 6.37% yesterday, while five-year fixes were up from 5.17% to 5.94%.
London had the second-sharpest year-on-year decline, at 4.3%, but average prices were still well above the rest of the UK.
Matt Thompson, head of sales at Chestertons, said: “Despite interest rates going up, London’s property market remains buoyant. We are seeing more cash buyers but also meet house hunters who rather buy now before facing another potential rate hike.
“We have seen a clear uplift in buyer demand over the past months and, in June alone, conducted 20% more viewings than in June of last year. The capital’s high rents are another contributing factor to London’s continuous buyer interest. As more and more tenants are facing rent increases, many are reviewing their situation and conclude that, despite higher interest rates, buying still presents a financially attractive option.”
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