FTSE 100 Live: US recession likely as economy shrinks, Shell and Centrica profits rise

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The US economy contracted for the second consecutive quarter.

The U.S. has entered the widely accepted technical definition of a recession, according to data from the Commerce Department today.

The data marks the second consecutive quarter in which the economy shrank. Gross domestic product fell 0.9% year-on-year in the second quarter and was 0.2% lower than the first quarter. The decline followed a 1.6 percent drop in GDP in the first three months of the year.

Economists generally accept a two-quarter contraction as the definition of a recession, but the US government does not. Instead, the country’s National Bureau of Economic Research uses a range of analysis for its official definition of a recession.

Still, Thursday’s data is a stark reminder of the challenges policymakers face in supporting growth while also combating inflation by raising interest rates. The data came a day after the Federal Reserve raised rates by 0.75 percent for the second month in a row.

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KitKat producer Nestlé posted first-half sales growth despite rising inflation-adjusted prices.

Nestlé, the FMCG business of Kit-Kat and Aero, has reported a 9.2% increase in sales in the first half of the year despite introducing “price hikes” across its product portfolio.

Sales reached 45.6 billion Swiss francs (£39 billion) in the six-month period from January to June. This number was up from 41.8 billion Swiss francs during the same period a year ago.

Core earnings per share rose 8.1% and 7.3% to 2.33 Swiss francs on a reported basis.

However, the company sounded the alarm, highlighting “increasing food insecurity” and “growing climate concerns” around the world.Unusual Weather Patterns”.

said Marc Schneider, CEO of Nestlé: Our local teams implemented the price hike responsibly. Volume and product mix were flexible based on our strong brands, differentiated offerings and leading market positions.

“We limited the impact of unprecedented inflationary pressures and supply chain disruptions on our margin growth through disciplined cost controls and operational efficiencies.”

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Pfizer, the maker of the Covid vaccine, reported its biggest ever quarterly sales of nearly $28 billion.

PFIZER, the global drug giant best known for its CoVID-19 vaccine, became the latest big name to beat forecasts from the US as Wall Street’s earnings season gathers pace.

The company powered through forecasts, reporting second-quarter sales totaling $27.7 billion, a record high. That includes nearly $9 billion in sales of its Covid vaccine and more than $8 billion for antiviral treatments. The numbers came a day after it announced the start of mid-stage trials of a vaccine for the Omicron Covid sub-variant BA2.

In the run-up to today’s financial results, it was reported that take-up of Pfizer’s Paxlovid antiviral drug has slowed, as a boom in sales of such treatments has cooled with the lifting of Covid restrictions in much of the world. . Paxlovid was, for a while, one of the fastest-selling drugs of all time.

Strong earnings announced today show that demand is strong as the pandemic fades from the headlines in much of the world.

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Electronics firm DiscoverIE Group lit up the FTSE 250 on strong earnings.

DISCOVERIE, the bespoke electronics maker, topped London’s FTSE 250 leaderboard in afternoon trade, helped by better first-quarter earnings forecasts.

The company has manufacturing facilities in Sri Lanka and said production there was at expected levels despite the unrest in the country.

Its stock rose nearly 10% to 749p. The rally came as the Guildford-based company said sales rose 27 per cent year-on-year at constant exchange rates, with orders coming in stronger than expected. DiscoverIE builds application-specific components for industrial clients, a business model that creates long-term revenue streams.

Overall, the FTSE 250 was up 98 points at 19,737.84 in early afternoon trade. The FTSE 100 ended a bright start to a busy day to settle at 7344.92.

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Virgin Wines Decline After End Of Pandemic Increase

Shares in Virgin Wines fell 7.6% this morning after its sales fell, signaling an increase in the company’s pandemic growth.

The company reported a £4.6 million fall in sales, while an 8% increase in subscriptions to the firm’s ‘WineBank’ subscription scheme was partly offset by an increase in subscription cancellations. Vinebank subscribers now represent 81 percent of consumer sales.

The Norwich-based company increased its market share from 6.1% to 8.4% over the past year, according to data from IBIS World.

The result marks the company’s first full year of trading since its £110 million IPO on the AIM market in March 2021. Its share price has fallen 67% over the past year.

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Meta revenue falls for the first time as ad sales dry up.

Facebook owner Meta’s revenue fell for the first time as user growth slowed and ad revenue declined.

Sales fell 1 percent to $28.8 billion in the three months to June 2022, while profit fell 36 percent to $6.7 billion. The social media giant said revenue could fall further, falling as much as $26 billion in the next quarter. Facebook’s monthly active users grew by just 1 percent from last year.

Meta founder Mark Zuckerberg told investors: “It appears we have entered an economic downturn that will have a broad impact on the digital advertising business.

“It’s always difficult to predict how deep or long these cycles will be, but I would say the situation looks worse than a quarter ago.”

Meta shares have fallen nearly 50 percent since the start of 2022.

Read more here

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Barclays suffered a trading blunder

Shares in Barclays suffered a small loss today after it set aside 1.5 billion pounds to cover a US trade default.

It ended trading growth in its investment banking arm, the jewel in the UK bank’s crown.

A paperwork glitch saw it sell about $18 billion more exchange-traded notes in the US than it had intended, an early headache for new CEO CS Venkata Krishnan.

Profits halved to £1 billion in the second quarter because of provisions for trading impairment and other mismanagement.

Shares fell 4p to 153p – they are down 11% this year.

Despite this, the bank is planning to buy back £500 million of its shares and will pay a 2.5p dividend.

The CEO, known as Venkat, said the bank was “alert to the pressure that the rising cost of living will have on our customers and colleagues. We have a number of initiatives in place to help and Trying to do more.

All banks have been hit this year due to deal-making and new share flotation. If business doesn’t pick up later this year, there are fears of major job cuts.

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City Comment: CWU needs to reconsider.

Cartoon cartoon of union leaders – Baron! Militants! – Don’t do too much for the national debate. Usually they are not both, they are just trying to do the best for their members under the most difficult of circumstances.

Cliches about fat cat CEOs are barely better.

Philip Johnson at BT is – you’d be surprised – a well-paid man who was already very rich before he arrived at the telecoms company in 2019.

If the unions leading the two-day strike starting tomorrow think he’s some sort of Dickensian trying to boost profits on the backs of struggling staff, they’ve lost their man.

He would be happy to pay workers more if he could justify it, but he would have to think about next year and the year after that.

One suspects that Andy Kerr, the telecoms official at the CWU, knows this and secretly thinks BT’s pay rise to his staff is decent and uncomplicated.

After negotiating a deal last April BT decided to go ahead and pay each an extra £1500 a year.

This can cover the upcoming increase in their energy bills. Moreover, they are already earning money even as they download the tools.

It is an important point of principle to allow them to withdraw their labor if they feel offended, but one wonders if they will regret it.

There are certainly worse places to work than BT and if the strikes have a real impact, it means the company will have fewer customers. Which means it needs less staff.

CWU should reconsider this.

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BT staff ready to go on strike.

BT boss Philip Johnson today expressed his “sadness and disappointment” as unions walk out on a two-day strike starting tomorrow.

The company today returned to revenue growth for the first time in five years, which City had been watching closely, with a 1% rise in the first quarter to £5.1 billion.

But it has failed to reach an agreement with 40,000 staff members of the overpaid Communications Workers Union. They are striking tomorrow and Monday amid fears of national strikes across many industries.

All BT staff received a £1500 pay rise last April, worth an average of 5% a year and more on lower pay.

Jensen told the Standard: “I respect their views. But we’ve offered the biggest pay rise in 20 years. I think it’s fair and affordable, as with almost any company. Compares really well. It compares well with the public sector with doctors and nurses. I think it’s really sad, I’m disappointed.”

Read more here

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Shell shares higher after record profit.

Shares in Shell rose 21p to 2138p after it reported a record profit of $11.5 billion (£9.4 billion) and opted to use a further $6 billion (£4.9 billion) of its excess cash on share buybacks. It is paying an unchanged quarterly dividend of 25 cents per share.

At Centrica, shareholders are to receive a dividend for the first time in three years, with a payout of 1p per share.

The move follows a period of restructuring under boss Chris O’Shea at a time of rising domestic energy bills and after the FTSE 100-listed company’s generation and nuclear generation activities benefited from higher wholesale prices.

Half-year adjusted profit rose from £262 million to £1.3 billion despite weaker trading at its British Gas arm. Shares have risen sharply in recent weeks but fell 3.3p to 87.7p today.

In a busy session for corporate results, the FTSE 100 index rose 17.74 points to 7330.49. Wall Street retreated despite a strong session last night after Federal Reserve Chairman Jerome Powell raised hopes of slowing the pace of interest rate hikes.

His comments came as policymakers raised the target range for the fed funds rate to an expected 75 basis points, a move that would keep U.S. borrowing costs between 2.25% and 2.5% of their target starting in 2019. taken to the highest level.