FTSE 100 Live: Energy crunch adds to pressure on jittery London market


global energy crunch continues to drive gas prices higher after China reportedly ordered its state-owned companies to do whatever it takes to secure supplies for this winter.

The latest unsettling developments have added to the inflationary fears of European markets, with the FTSE 100 index opening more than 1% lower amid heavy falls for the likes of Rolls-Royce and JD Sports Fashion.

Online electricals retailer AO World highlighted the tough environment today when it said UK growth had been impacted by the shortage of delivery drivers and disruption in the global supply chain. Its shares skidded 15% in the FTSE 250 index.

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AO World UK growth hit by delivery driver shortage

Online electricals retailer AO World has warned that first-half UK growth has been impacted by the nationwide shortage of shortage of delivery drivers, as well as global supply chain problems.

FTSE 250 firm AO World, which is led by John Roberts, said: “The challenging market dynamics in both the UK and Germany resulted in lower volumes than expected which affected operational leverage, particularly in the second quarter.”

Total sales improved by around 5% in the six months to September 30, with UK sales some 6% higher.

Read the full story HERE.


Gloomy start to quarter

September was a much weaker month for financial markets, with October starting in similar fashion after the FTSE 100 index opened more than 1% lower at near the 7,000 barrier.

Shares in JD Sports Fashion fell 4%, alongside declines of 3% for Rolls-Royce, British Airways owner IAG and Premier Inn hotels chain Whitbread.

Deutsche Bank reports that just seven of the 38 non-currency assets in its coverage were in positive territory last month, the smallest number so far this year amidst broad declines for both equities and bonds.

Headwinds have included mounting inflationary pressures and concerns about China’s debt-laden property firm Evergrande.

Deutsche Bank said the overall picture across the third quarter was a more solid one, with 24 of the 38 assets posting gains.

Jim Reid, the bank’s global head of thematic research, said: “In part, markets have been supported by the Covid situation proving more contained than some had feared at the start of the quarter, with no major variants emerging since delta.

“Furthermore, central banks have continued to exhibit a fairly dovish stance overall, even if we’ve seen a few hawkish pivots in recent weeks that’s contributed to some of the losses in September.”


Sainsbury’s starts biggest ever Christmas recruitment drive

Sainsbury’s is seeking thousands of delivery drivers to work over Christmas, with some £500 bonuses on offer, the company has said.

Sainsbury’s is led by Simon Roberts

/ Sainsbury’s

Supermarket chain Sainsbury’s is looking for around 22,000 workers, in its biggest ever Christmas recruitment drive.

The grocer, which also owns Argos, said there will be some 14,500 in-store roles, 4500 openings in logistics (in house or for third parties Sainsbury’s uses), and 3000 delivery driver roles. The jobs are temporary for the festive period. Bonuses of £500 will be on offer in some cases.

Read the full story HERE.


Will OPEC raise output?

With natural gas prices soaring due to a global shortage, energy suppliers have turned to oil in a move that has contributed to the recent spike in Brent crude above $80 a barrel.

The existing plan of OPEC and allies led by Russia is to boost production by 400,000 barrels a day in November and December. But with oil prices at a three-year high and consumers in need of more supplies, there will be pressure at their meeting on Monday to go further.

Howie Lee, an economist at Singapore’s OCBC bank, told Reuters: “Last time we saw $80, supply was considerably more than where we are right now and I think the world could do with some extra barrels now given the global energy crunch.”

Brent crude was slightly lower at just over $78 today amid hopes that the OPEC+ alliance will step up the planned increase in output.


Wetherspoons crashes to massive loss

JD Wetherspoons crashed to a £155 million loss after a year of turmoil that highlights the pressure facing the pub trade.

Founder and chairman Tim Martin partly blames the government, which he thinks has singled out pubs for unfair treatment.

He said: “In the last year, the country moved, in succession, from lockdown, to ‘Eat Out to Help Out’, to curfews, to firebreaks, to pints with a substantial meal only, to different tier systems and to further lockdowns. Pub management teams, and indeed the entire hospitality industry, had an almost impossible burden in trying to communicate often conflicting and arbitrary rules to customers.”


Red October

European markets are set for a negative start on the back of yesterday’s poor session on Wall Street, when the S&P 500 completed its worst monthly performance since the pandemic started.

A deal to fund the US government until December 3 in order to avert a shutdown failed to boost the mood as the Dow Jones Industrial Average and the other major indices closed more than 1% lower last night.

The FTSE 100 index is expected to open the final quarter of the year 56 points lower at 7,030, according to CMC Markets. The premier index is still up 10% so far in 2021.

CMC’s chief markets analyst Michael Hewson said: “As we head into the final quarter of 2021 the gains in the year to date are still pretty decent, which raises the question, how much more is left in the tank, and whether this October will live up to the reputation of Octobers past, and deliver a huge curveball, as well as giving investors an anxiety attack.

“There’s certainly plenty to be concerned about from surging energy prices, supply chain disruptions, and concerns about more persistent inflation.“

Reports that China’s state-owned energy companies have been instructed to “do whatever it takes” to secure winter energy supplies will add to ongoing about energy costs.

Oanda’s Jeffrey Halley noted: “Asia spot natural gas prices are now trading at near the equivalent of $180 a barrel of Brent crude, meaning that oil’s appeal as a gas substitute for power generation is almost irresistible.”

Brent crude was trading at $78.23 this morning ahead of an OPEC meeting next week, when ministers will be under pressure to increase production quotas.

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