FTSE 100 down on oil price slump

FTSE NEWS

The FTSE 100 fell in trading on Thursday as the oil price continued its slump, affecting major constituents of the index. It was down 0.48% to 7,255.96.

• On Monday (22 November) EY Item Club reports its autumn economic forecast looking forward at the UK’s economic prospects.
• IHS/Markit release the latest flash UK PMI on Tuesday (23 November) giving a recent estimate of market conditions.
• CBI on Wednesday (24 November) releases its latest Industrial Trends Survey looking at the health of the UK’s manufacturing sector.
• It is Thanksgiving on Thursday (25 November) in the US, meaning US markets are closed for the day.
• On Friday (26 November) it's Black Friday, one of the largest retail calendar events in the developed world.

SECTOR IN FOCUS

Banks have been the subject of much recent conversation among investors with impending interest rate rises potentially leading to fatter profit margins.

But while that may spell good news for the sector, one UK bank has been particularly beleaguered for some time, despite once having been referred to as a ‘challenger’ to big incumbents such as HSBC (HSBA), Lloyds Bank (LLOY) and NatWest (NWG).

Metro Bank (MTRO) has swung from one crisis to another in recent times and now its mooted takeover by private equity firm Carlyle has been kicked to the curb, sending its share price tumbling.

The company, which was created in 2010 on the premise that customers wanted a strong branch presence to do their banking, hit the rocks in 2019 when an accounting scandal emerged which saw the founder ousted as chairman.

The firm’s chief executive Dan Frumkin was brought in as a turnaround specialist to steady the ship, while his plans were seen to be side lined by takeover talks, they will again be front and centre as the firm attempts to overcome its problems, which includes paying rent on 78 bank branches little used during the pandemic.

ECONOMIC UPDATE

Inflation has reared its head again as the latest figures from the Office for National Statistics (ONS) show it to have reached levels not seen since November 2011.

CPI inflation hit 4.2% in October - more than double the Bank of England’s long-term target. Prices are rising across a raft of consumer goods and services, with gas and electricity, petrol, second-hand cars, furniture, food and drink all notable rises in October.

The inflation numbers underline two core issues for the economy at the moment – a massive expansion in consumer demand as households return to ‘normal’ spending levels after the heavy savings of the pandemic, and also major global supply constraints caused by choke points in the global economy as it tries to meet that demand.

The Bank of England was widely tipped to make a move on interest rates in November, with rates across financial markets rising in anticipation. But against this the Monetary Policy Committee (MPC) held fire. The Bank now predict inflation will hit 5% by Spring 2022, but it still holds the view that inflation if not temporary, will drift lower once the economy normalises.

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COMPANY ANNOUNCEMENTS

23 November – Pets at Home (PETS) delivers its latest interim results on Tuesday (23 November) hoping to build upon what has been a banner time for the pet product retailer. The firm has boomed during the pandemic as new pet owners look to its services to help look after their four-legged friends. The company now offers what it calls ‘nose to tail’ services for pets and has a commanding share of the market in the UK, however, change is afoot.  Chief executive Peter Pritchard announced recently he would be stepping down in May 2022, after 11 years at the helm, which has left investors nervous about the company’s future direction.

24 November – Financial services provider Virgin Money (VMUK) reports its full-year results on Wednesday (24 November). The firm has recently announced it plans to slash costs as a part of its drive into digital banking. The firm, which combines the legacy businesses of both Virgin Money and Clydesdale and Yorkshire Banks has been through a long process of combining the businesses into one firm. It sees £175 million-worth of cost savings between now and 2024 to be made by streamlining processes within the business but would book £275 million of restructuring charges as a result. The bank’s branch network seems to be facing the brunt of the cost pressure, with some 33 branches slated for closure.