Business leaders plead for stability after Boris Johnson’s resignation
London’s business and financial leaders pleaded for a period of “serious, stable government” to put the economy on an even keel following the resignation of Boris Johnson.
They warned that an extended handover period into the Autumn risked an economic policy “vacuum” that would make it harder to avoid a major downturn later in the year.
The pound bounbced more than half a cent against the dollar today as relieved investors sensed that the worst of an extraordinary period of political turmoil could now be over.
However, these were also concerns that the “relief rally” could soon fizzle out as the harsh reality of soaring energy costs, double digit infaltion and failing consumer confidience kicks in.
Chris Beauchamp, chief market analyst at trading platform IG Group, said: “The pound has been looking for any excuse to bounce against the dollar following its drubbing lately.
“Boris’ decision to go removes at least some of the uncertainty, and means that a snap election is off the cards. Longer-term the outlook is still bleak for the pound, so this bounce is unlikely to last.”
Sterling rises on news of Johnson’s exit
Sterling rose on news of Boris Johnson’s resignation on Thursday, as business chiefs called for leadership and tax cuts to boost the UK’s faltering economy.
Shortly after Mr Johnson’s resignation bombshell hit dealing screens in the City, the pound was up around half a cent against the dollar at $1.1972 before falling back slightly.
The FTSE 100 index was also trading higher, up 80.58 points at 7188.35.
Walid Koudmani, chief market analyst at financial brokerage XTB, said: “The resignation of Boris Johnson will breathe a sigh of relief for UK investors as it curtails the uncertainty of a government in name only.
“Make no mistake however, the GBP remains severely weak due to the dire state of the UK economy which is underperforming its peers, likely to enter into a recession while the Bank of England refuses to hike interest rates aggressively to deal with the escalating inflation. The new prime minister — whoever that is — has a massive job on their hands.”
London Chamber of Commerce chief reacts to PM’s resignation
The head of the London Chamber of Commerce has decried the “tremendous disadvantage” recent politics has had on London business as he reacted to Boris Johnson’s resignation.
Richard Burge said: “London’s business community, and indeed the whole of the UK’s economy, faces the most challenging operating environment for decades.
“What the country needs now more than ever is serious, stable government that is driven by the values that have traditionally made Britain a successful and globally admired country.
“Recently, our politics and too much of our policy has put British business at a tremendous disadvantage.
“For our economy to thrive, we need to see leadership that is committed to delivering economic growth and balanced prosperity.”
Ladbrokes and Coral owner suffers from fall in online betting
Entain, the owner of bookmakers Ladbrokes and Coral, today said punters have cut back on online gambling as inflation eats away at their spending power.
The company said it now expected flat net revenue from its online operations for the year, having previously forecast growth in the mid-to-high single digits. Its shares fell 5.4% to 1031p in morning trade, making it the biggest single faller on London’s FTSE 100 stock index.
There was a better showing at its betting shops, where retail trading surpassed expectations, helping volumes in the second quarter move “ahead of pre-Covid levels, driven by gaming and self-service betting terminals”.
Jette Nygaard-Andersen, Entain’s chief executive, said the “macro-economic outlook is uncertain”, but that “underlying performance of our business remains strong.”
Entain’s online brands include Foxy Bingo, Gala and Ninja Casino. It has a 50/50 joint venture with MGM Resorts International to run BetMGM.
The company also said it expectedthat its acquisition of the Dutch company BetCity to complete in the second half of the year, which would help it to “deliver a strategic growth opportunity” in a “newly regulated market.”
Watches of Switzerland shares rise after record profits
Watches of Switzerland unveiled record profits today after what its CEO called a “tremendous year”.
Profit before tax almost doubled to £126 million, from group revenue of £1.2 billion, up 40% at constant exchange rates. UK revenue rose 36% to £810 million while US sales reached £428 million, up 48%.
The company’s UK performance was helped by strong demand at its Boutique Rolex outlets, including one in Westfield in Shepherd’s Bush.
Tudor branded watches, promoted by David Beckham, above, were also key drivers of sales.
Watches of Switzerland opened 18 new showrooms in the year and refurbished 17 and said it had “big plans” for its European business.
Shares were up 1.1% at 797p this morning.
Cut rates to save high street says Currys boss
The new chancellor should make cutting business rates for retailers a top priority, said the boss of Currys today.
Alex Baldock said the high street was been overpaying for too long. “Retail can’t keep paying 10% of business taxation when we are 5% of the economy,” he said.
Baldock, a Tory supporter and donor, said his message to chancellor Nadhim Zahawi was: “What we need from the government at the moment is some consistency. Consumers need help through the cost of living crisis.”
Profits at the electricals group quadrupled to £126 million for the year to April, a reflection that most stores were closed in the previous year. Sales were steady at £10.1 billion.
Currys said it will “cushion” the blow to consumers from inflation by freezing prices where it can, but said it needs help from government. A VAT cut might also help.
Baldock, a former banker who took over at Currys in 2018, says customers are relying more and more on credit to buy goods, but said he would be sure to be “responsible”, in partnership with “very sober” lenders.
He added: “We owe this performance to our thousands of capable and committed colleagues, who’ve built a stronger Currys. They’ve loved seeing customers returning to our stores in droves, and helping them with face-to-face expert advice and the full range of our services that ensure customers stick with us. Stores, in tandem with online, give our customers the omnichannel best of both worlds they clearly prefer.”
Currys shares rose 4p to 70p, but they have nearly halved in the last year.
ZOO Digital shares up 7% after sales jump 78%
Shares in movie subtitle and dubbing specialist Zoo Digital climbed 7% after it posted record results fuelled by the expansion of global streaming services.
Zoo Digital saw sales jump 78% to reach $70.4 million (£58.8 million), while operating profit trebled to $3.1 million.
The company partners with streaming services like Netflix and Disney+ to provide subtitling and dubbing services using a global network of freelance voice actors.
The firm said it had seen a surge in demand for its dubbing services as streaming platforms ramped up their content production as subscriber numbers swelled.
Zoo Digital CEO Stuart Green told the Standard: “what the pandemic did was accelerate that shift — stuck at home we wanted to watch new programmes. More content is being produced now than at any time in the past.
“We’ve had an amazing year of profitable growth – we’re capturing market share through expanding and tapping into this fantastic opportunity.”
FTSE 100 down 300 points over PM’s tenure
On the face of it, the City might have looked like it was cheering the demise of Boris Johnson.
As he was prepping his resignation speech, the FTSE 100 rallied 80 points to 7188. Miners and banks led the charge, with Anglo American up 105p to 2735p, with Standard Chartered up 22p to 600p.
Under the surface things were less cheery. And over the three years of the PM’s reign, the leading index is down about 300 points overall, commentators note.
IPO proceeds plunge 94% amid geopolitical tension and inflationary pressure
Proceeds from UK IPOs dropped 94% in the first half of 2022 as firms shunned public listings amid geopolitical tension and inflationary pressure.
Just six companies were listed onto UK exchanges in the second quarter of 2022, with only a single company joining the AIM market in a £6 million raise.
The slim pickings for the UK IPO market are in stark contrast to a bumper year in 2021, in which the London Stock Exchange became the largest global centre for IPOs outside the US and China, with companies raising a combined £3.8 billion in the second quarter alone.
The UK IPO market performed worse than the global market as a whole, which saw proceeds decline 58% over the same period.
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