BUSINESS LIVE: Standard Chartered profits slump; CAA hikes airline charges cap; WPP slashes forecast

Just before close, the FTSE 100 was 0.81% down at 7,354.12.

Meanwhile, the FTSE 250 was 0.44% lower at 16,796.38.

Interest rates have peaked but will remain high until the end of next year while house prices will not rise again until 2025, says Britain’s biggest mortgage lender.

Posting a rise in third-quarter profits, Lloyds Bank predicted rates will stay at 5.25 per cent until late 2024 when they will hit 5 per cent, and said house prices will carry on falling until the end of next year.

Top London estate agency Foxtons has seen house sales slump, as higher mortgage rates continue to hit the property market.

Sales revenue in third quarter was down by 17 per cent to £9.9million with market volumes falling by 23 per cent.

The US economy grew this summer at its fastest rate in nearly two years thanks to a surge in consumer spending.

Gross domestic product increased 4.9 percent annually in the third quarter, according to preliminary figures released by the Commerce Department on Thursday.

Hetal Mehta, head of economic research at St. James’s Place, comments on the latest ECB rate decision:

Unlike the last meeting, the ECB kept rates on hold as widely expected. We’ve had a long spate of negative data surprises – including weak business sentiment – and continued progress on inflation.

But there is still a while to go before the ECB will be comfortable enough to signal a cut in rates. Unemployment is still low and core inflation tends to move slowly.

The ECB is most likely done on hiking for now but the bias will be towards a hike for a few more months.

(AP) – The European Central Bank left interest rates unchanged Thursday for the first time in over a year as the Israel-Hamas war spreads even more gloom over already downbeat prospects for Europe´s economy.

It is the bank’s first meeting with no change after a torrid pace of 10 straight increases dating to July 2022 that pushed its key rate to a record-high 4%. The ECB joins the U.S. Federal Reserve, Bank of England and others in holding borrowing costs steady – albeit at the highest levels in years – as inflation has eased.

In Europe, “inflation is still expected to stay too high for too long, and domestic price pressures remain strong. At the same time, inflation dropped markedly in September,” ECB President Christine Lagarde said at a news conference.

The bank said it would keep rates high enough to restrict economic activity and contain inflation “for as long as necessary.”

A takeover battle for Wagamama’s parent company could be on the horizon after Pizza Express’s owner expressed an interest.

The Restaurant Group acknowledged that it had received a request for ‘diligence information’ from Wheel Topco, the firm behind the mock-Italian dining chain, so that it could assess a potential offer.

The number of cars built in the UK increased by almost 40 per cent over the past year, official figures released this morning show – predominantly driven by a rise in exports.

A total of 88,230 vehicles left UK factories in September, 25,105 more than the same month last year, making it the best September on record for three years, according to the Society of Motor Manufacturers and Traders.

WPP cut its outlook for the second time in as many quarters as tech clients continued to cut back on marketing spend.

The firm, whose agencies include Ogilvy, said it now expects like-for-like growth for 2023 of just 0.5 to 1 per cent for the year after revenues less pass-through costs fell 0.6 per cent in the last quarter.

The United Auto Workers union has reached a tentative new contract agreement with Ford – the first step towards ending a nearly six-week strike.

The four-year deal that includes a 25 percent general wage increase still has to be approved by 57,000 union members, but it could conclude the union’s historic series of strikes at factories run by Ford, General Motors and Jeep maker Stellantis.

Britain’s air traffic control provider will be allowed to significantly hike airline charges to help recoup pandemic-related costs.

The Civil Aviation Authority has granted National Air Traffic Services permission to increase average charges in nominal terms for air carriers from £47 to £64 per flight up to 2027, equivalent to a 43p rise for each passenger.

Banking giant Standard Chartered shares tumbled after it revealed pre-tax profits fell by a third year-on-year in the third quarter, far worse than analysts had expected.

StanChart, which earns most of its revenue in Asia, posted a statutory pre-tax profit $633million (£524million) for the quarter, down from $996million last year and well below expectations of $1.41billion.

Facebook owner Meta will report its third-quarter earnings later on Wednesday, with Mark Zuckerberg’s firm guiding sales of $32billion to $34.5billion, and investors keeping a keen eye on the group’s expenses amid an expensive foray into artificial intelligence and virtual reality.

The shock rippling through Europe’s fintech sector turned up a notch yesterday after shares in French payment giant Worldline plummeted by more than half.

Listed on the Paris stock exchange, it is best known for providing terminals to process payments, serving more than 1m merchants across the world, including McDonald’s and supermarket giant Carrefour.

Late payments to small businesses have hit a three-year high, with industry leaders calling on the Chancellor and big businesses to do more to help.

Small businesses waited an average of 29.4 days to be paid by their customers in the three months to September, according to Xero’s quarterly small business index. This was 0.5 days longer than the average across the first half of the year.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown:

‘Communications and advertising giant WPP’s engines have stalled again. Usually high-spending technology clients in North America have applied the brakes amid an uncertain economic backdrop.

‘China’s also dragging performance down as the macro environment doesn’t lend itself to loose corporate spending. This has culminated in another reduction in full year expectations.

‘While seeing growth go into reverse isn’t ideal, it’s not wholly unexpected given that advertising activity is a clear-cut barometer of the economy.

‘WPP is doing what it can to combat these challenges, including consolidating and streamlining its offering. That could mean the business that emerges from all this could be stronger than what it started with, but there are considerable speed bumps to traverse first.

‘As the digital world transforms at pace, this giant will have to move as nimbly as it can if it wants to thrive.’

Consumer goods giant Unilever has posted underlying sales growth of 5.2 per cent, following price hikes of 5.8 per cent and volumes declining by 0.6 per cent, with the group maintaining full-year expectations.

New CEO, Hein Schumacher, has announced an ‘Action Plan’ to boost growth and productivity.

Charlie Huggins, manager of the quality shares portfolio at Wealth Club, commented:

‘This is another drab quarter from Unilever with underlying sales growth being entirely led by higher prices and volume declines accelerating in the quarter. Europe was particularly weak with volumes falling by over 10%, and the percentage of Unilever’s business winning market share on a rolling 12 month-basis fell to a disappointing 38%.

‘Unilever’s new CEO, Hein Schumacher, recognises that the group could and should be doing better. His ‘Action Plan’, announced today, is designed to reinvigorate performance through more impactful innovation, productivity savings and an improved culture.

‘Schumacher’s mantra is “fewer things, done better, with greater impact”. This means prioritising the top 30 Power Brands, instilling greater accountability and simplifying the business.

‘For too long, Unilever has been too slow-moving, too complex and too weighed down by too many mediocre brands. A strategy to simplify and refocus on core strengths, perhaps augmented by some non-core brand disposals, feels like the right way to go.

‘From here it’s all about the execution. Anyone can talk a good game with pretty PowerPoint slides, but actually doing it is quite another matter. Unilever’s previous strategy updates promising greater agility, productivity and innovation ultimately didn’t really deliver. This Action Plan feels like it has more substance, but the proof will be in the pudding.’

WPP has cut its outlook for the second quarter in a row, with the world’s largest ad group’s big tech clients continue to rein in marketing spend.

‘In a world being rapidly reshaped, we need to continue to evolve our offer to clients and simplify our business. I am excited by the creation of the world’s largest creative agency, VML, and the continued evolution of GroupM.

‘Both these developments will strengthen our offer to clients, simplify the integration of our services and maximise the returns on our ongoing investments in AI and technology.

‘Our top-line performance in Q3 was below our expectations and continued to be impacted by the cautious spending trends we saw in Q2, particularly across technology clients with more impact from this felt in GroupM over the summer than the first half.

‘We continue to win both creative and media assignments from leading global companies including significant wins in the third quarter with Estée Lauder (media), Hyatt (creative), Lenovo (creative), Nestlé (media) and Verizon (creative). Our net new business performance of $1.4bn in the quarter showed sequential improvement after a tougher first half.

‘We will provide more detail on today’s announcements, our strategic roadmap and actions to drive growth, further efficiencies and margin expansion at our Capital Markets Day in January.’

The Civil Aviation Authority has increased the amount airlines can be charged for air traffic control services to help national provider NATS recoup costs incurred during the pandemic.

NATS has been in the spotlight after an outage in late August which caused thousands of flight cancellations and delays across Britain and Europe and which airlines have said cost them millions of pounds. Airline executives last week called for new rules on passenger compensation in the event of such disruption.

The CAA on Thursday confirmed a provisional decision taken in July that NATS could set an average unit rate for regulated activities at £64 in nominal terms from 2023 to 2027, up from £47.

The average cost of UK air traffic services per passenger per flight would go up by 43p on average, to approximately £2.08, the CAA said.

Former NatWest boss Dame Alison Rose broke data protection laws when she discussed the closure of Nigel Farage’s account with a journalist, a watchdog has found.

The Information Commissioner’s Office (ICO) ruled the executive, who was forced to quit amid the de-banking scandal, inappropriately shared the former UKIP leader’s personal data in an inaccurate way.

Standard Chartered profits slumped by a third in the third quarter, a far worse result than forecasted, as the bank took a $1billion impairment charge from its exposure to China’s embattled real estate and banking sectors.

StanChart, which earns most of its revenue in Asia, posted a statutory pre-tax profit $633million for the quarter, down from $996million last year and well below expectations of $1.41billion.

Credit impairment charges were up by $62million year-on-year to $294million, as the bank took a $186million charge related to China’s troubled commercial real estate market.

The bank also took a $700million hit from its stake in China Bohai Bank, which it said reflected subdued earnings at the lender and the challenging economic backdrop.

Bill Winters, group chief executive, said:

‘We have continued to make strong progress in the third quarter against the five strategic actions outlined last year, delivering a solid set of results.

‘Wealth Management has continued its recovery with double digit income growth and the Financial Markets performance has been resilient against a strong comparator period.

‘We remain highly liquid, and well capitalised, with a CET1 ratio towards the top of our target range and confident in the delivery of our 2023 financial targets, including a return on tangible equity of 10%.’