FTSE 100 opens higher, Citi upgrades Tate & Lyle PLC

  • FTSE 100 opens higher, up 48 points
  • Chancellor considers removing cap on bankers’ bonuses – FT
  • Shell CEO Ben van Beurden resigns

Tate & Lyle PLC (LSE:TATE) received a boost today after Citi Research put the company on its buy list.

Shares rose 2% after upgrading to buy from hold, with Citi forecasting the company can deliver 9% compound annual growth in normalized EBIT, which is underestimated at current stock price levels.

Though Tate has more near-term exposure to gas inflation than its peers, Citi estimated that the downside in full-year 2024 consensus EBIT guidance was limited once adjusted for pricing and self-help.

Citi said it lied to the company about its transformational history and defensive characteristics, and sees further upside as it limits the valuation discount to higher-multiple ingredient stocks.

8.15am: FTSE 100 opens higher

The FTSE 100 opened Thursday after gains in the US overnight and ahead of US retail sales later today, which will provide another indication of the strength of the US economy.

At 8.10am the FTSE 100 was 45 points higher at 7,322, with the wider FTSE 250 up 62 points at 18,911.

But investor confidence is fragile, according to a snapshot of investor sentiment from Hargreaves Lansdown.

The Hargeaves Lansdown Investor Confidence Index showed confidence plummeting 38% between August and September, with confidence in UK economic growth falling 35% between August and September.

Susannah Streeter, Senior Investment and Markets Analyst at Hargreaves Lansdown, said: “Recent market volatility has hit sentiment and data showing inflation is still very hot for central banks is clearly proving worrying.”

“Investors expect growth to be dampened by robust rate hikes, with confidence in UK economic growth falling 35% between August and September.”

“This is a marked shift in sentiment towards UK economic growth in August, which was more optimistic with confidence rising around 13%.”

DFS Furniture PLC (LSE:DFS) slumped 13% after warning that order volumes fell significantly in the fourth quarter of full-year 2022 and the first quarter of full-year 2023, reflecting a trend seen across the furniture industry .

As a result, the group presented three scenarios for this year’s performance, covering a wide range of pre-tax earnings forecasts for the coming year from 20m to 54m pandemic levels between -15% and -5%.

Chancellor Kwasi Kwarteng is reportedly considering a plan to abolish banker bonus caps as part of a post-Brexit bid to boost the competitiveness of the city and the UK economy.

He argues that the cap, introduced under EU rules in 2014 after the 2008 financial crisis and subsequent eurozone debt crisis, would make London a more attractive destination for top global talent, according to the Financial Times.

The UK has always opposed the measure on the grounds that it would damage London’s image as a global financial center.

But the idea of ​​abandoning the cap was dropped by Boris Johnson’s government on the grounds that it would be politically difficult to support wealthy bankers at a time of a cost-of-living crisis.

7.25 a.m .: Shell boss resigns

Oil and gas giant Shell PLC (LSE:SHEL, NYSE:SHEL) has confirmed recent speculation that CEO Ben van Beurden will step down from his position at the end of 2022 after a 39-year career with the company.

Van Beurden will be succeeded by Wael Sawan on 1 January 2023 but will remain with the group as an advisor to the board until 30 June 2023 to ensure a smooth transition.

Chairman Andrew Mackenzie said: “Ben can look back with great pride on an exceptional 39-year career at Shell, culminating in nine years as an exceptional CEO.”

“He leaves behind a financially strong and profitable company with a robust balance sheet, a very strong cash flow generation capability and a compelling set of growth options.”

“Wael Sawan is an exceptional leader with all the qualities needed to lead Shell safely and profitably through the next phase of transition and growth.”

7.15am: London seen higher ahead of US retail sales numbers

UK markets are expected to open higher today, recovering some of the last two days’ losses, but Michael Hewson, chief market analyst at CMC Markets UK, said the surprise in US inflation earlier this week continued as the “a black cloud” hangs over the European markets.

Hewson said: “The only question now is whether we might see a 75 basis point move or something more substantial in the form of a 100 basis point move by the Federal Reserve.

“It still seems unlikely that the Fed will drop more than 75 basis points at this point despite the collective freakout of the last few days, with the positive end in the US last night likely to cause European markets to take some gains later in the morning open higher.”

Another measure of the state of the US economy is due out today with the US retail sales numbers, which could reinforce this hawkish reading if there is another strong read.

“US consumers’ resilience in the face of shrinking disposable incomes has been quite remarkable this year, despite high food and energy prices that appear to have had little impact on US consumers’ willingness to go out and spend,” Hewson said.

“US retail sales have been positive every single month this year apart from a modest -0.1 drop in May,” he added.

“Expectations for today’s August number have been revised down from a 0.3% gain over the past few days and are now expected to come in at -0.1%,” Hewson said.

6.55am: FTSE 100 seen higher

The FTSE 100 is looking for a bright start to the day after gains in the US overnight, with more key US economic data later, with retail sales to be announced.

In London, spread betting firms call the leading index up by around 30 points.

US markets ended a rollercoaster ride in positive territory, but Tuesday’s market slump continued to weigh heavily as investors speculated on how aggressive the Federal Reserve would be in its next rate hike.

At the close, the Dow Jones Industrial Average was up 30 points, or 0.1%, to 31,135, the S&P 500 was up 13 points, or 0.34%, to 3,946, while the Nasdaq Composite was up 86 points, or 0.74%, to 11,720.

In London, IG Group PLC is set to make a trading statement while results are due from DFS Furniture, among others.

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