FTSE 100 Live 19 April: IMF updates economic forecasts, US earnings season picks up pace

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FTSE turns higher as stocks rally

The FTSE 100 has turned positive in afternoon trade as stocks rally on the other side of the Atlantic.

London’s bluechip index is up 5 points with around 20 minutes of the trading day left, having spent much of the session underwater.

Momentum is being helped by trading in the US, where Wall Street’s three main indexes are sitting on gains of more than 1%.

The most domestically focused FTSE 250 is still down 130 points on the day.

That’s all from us on the blog today, join us again tomorrow.

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IMF: Russia’s war in Ukraine could lead to new world economic order

Russia’s war in Ukraine risks permanently fracturing the interconnected global economy and consigning to history the rules that have governed cross-border relations for the past 70 years, the International Montary Fund (IMF) has said.

In its World Economic Outlook, in which it downgraded global growth to 3.6% for 2022 from its 4.4% prediction in January, the body said there was a very real chance of a new world economic order emerging from the conflict.

The scale of the potential changes it foresees would mean greater regionalization of the global economy, with huge effort required to redraw supply chains.

“The war has also increased the risk of a more permanent fragmentation of the world economy into geopolitical blocks with distinct technology standards, cross-border payment systems, and reserve currencies,” it said.

“Such a tectonic shift would entail high adjustment costs and long-run efficiency losses as supply chains and production networks are reconfigured.

“It also represents a major challenge to the rules-based framework that has governed international and economic relations for the last 70 years.”

The IMF added that Russia’s war in Ukraine meant its predictions for global growth and inflation were “well-beyond the usual range” of uncertainty.

“Growth could slow significantly more while inflation could turn out higher than expected if, for instance, sanctions aimed at ending the war extend to an even broader volume of Russian energy and other exports,” it added.

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IMF slashes UK growth forecasts as inflation batters economy

The International Monetary Fund (IMF) slashed its growth forecasts for Britain today as it warned inflation will hit spending and investment.

In its latest quarterly report on the world’s economy, the IMF cut its forecast for UK GDP growth this year by one percentage point to 3.7%.

“Consumption is projected to be weaker than expected as inflation erodes real disposable income, while tighter financial conditions are expected to cool investment,” the organization said.

The IMF cut its forecast for global growth from 4.4% to 3.6%, saying conditions have “worsened significantly” since its last update in January.

The downgrade came a day after the World Bank slashed its global growth forecast as rising interest rates, soaring inflation, continued Covid-19 infections and war in Ukraine drag on global growth. The World Bank downgraded its forecast from 4.1% to 3.2%.

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US healthcare giant Johnson & Johnson has seen its shares fall more than 3% in pre-market trading after it cut its full-year sales and earnings guidance.

The company beat first-quarter profit expectations as adjusted net earnings hit $7.12 billion (£5.48 billion) but its sales of $23.4 billion were below market expectations.

The firm said given the supply surplus and demand uncertainty for Covid-19 vaccinations, it was suspending its guidance on this part of the business.

Johnson & Johnson now believes its reported sales for 2022 will be between $94.8-$95.8 billion, down from the $95.9-$96.9 billion range it predicted in January.

Furthermore, earnings per share guidance has dropped to $10.15-$10.35 from $10.4-$10.6 in January.

Mikaela Franceschina, senior analyst at Third Bridge, said Johnson & Johnson had been a “strong and stable performer”, as evidenced by their 13.6% full-year sales growth in 2021.

“Although their medical devices unit continues to suffer from Covid-19 headwinds, we can expect the market to recover throughout 2022,” she said.

“With the company’s plan to spin off their consumer health business, addition of new partnerships and robust pipeline, the company should continue to see success despite any potential setbacks with competitive pressures and supply chain constraints.”

Franceschina added that a key part of Johnson & Johnson’s business was its immunology drugs, such as Stelara (antibody medication that helps treat Crohn’s disease and psoriatic arthritis) and Tremfya (which helps treat psoriasis).

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Amazon has agreed to an independent racial equity audit following pressure from shareholders.

The New York pension fund filed a shareholder resolution last year asking for an audit, and while the proposal was only supported by 44 per cent of Amazon shareholders, the pressure on the company has been maintained.

The audit will analyze whether there are any disparate racial impacts on Amazon’s US hourly employees resulting from its policies and practices. Airbnb was the first company to do a racial audit in 2016.

New York State Common Retirement Fund and its Comptroller Thomas DiNapoli, which had pressed Amazon to conduct a racial audit, said they looked forward to learning more about Amazon’s plan for a review. But they said they “remain concerned that the company has provided few details and has made no assurances that the audit will be independent.”

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Funky Pigeon suspends orders as it investigates cyber attack

Online card seller Funky Pigeon has revealed it has been hacked and halted all customer orders.

The WH Smith-owned company said no customer payment data, such as bank account or credit card details, had been at risk, but that it was still assessing whether personal data, such as names, addresses and email addresses, had been accessed.

The Bristol-based business said it identified a cyber security incident on Thursday 14 April that had affected its systems, prompting it to temporarily suspend orders.

WH Smith said the incident would not have an impact on its finances, with half-year results due on 27 April.

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Boots aiming to rid plastic fiber wet wipes from its shelves this year

High street retailer Boots will remove all wet wipes that contain plastic fibers from its shelves by the end of the year, totaling more than 800 million annually.

The UK’s biggest pharmacy chain will replace the wipes with plant based biodegradable alternatives, following a trial that included Boots reformulating its own brand wipe ranges and making efforts to reduce plastic and become “a more sustainable retailer”.

Boots has written to its suppliers across the UK and the Republic of Ireland asking them to remove all wet wipes that contain plastic fibers by year end.

In the UK alone, 11 billion wet wipes are sold each year. Boots is one of the biggest sellers of wet wipes in the UK with over 140 different lines stocked across skincare, beauty, baby, tissue and health care categories. It is one of the leading sellers of beauty face wipes, representing up to 15% of all face wipes sold across the UK.

A large proportion of the 11 billion wet wipes used in the UK every year still contain some form of plastic and evidence suggests they are the cause of over nine in ten of the blockages in UK sewers.

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GlaxoSmithKline and AstraZeneca secure US drug approval boost

GlaxoSmithKline and AstraZeneca have secured victories with the US regulator in relation to treatments that could become blockbuster drugs for the firms.

Glaxo’s Daprodustat, which is used for the treatment of anemia in chronic kidney disease patient, has been approved by the Food and Drug Administration (FDA) in the US after its successful phase III clinical trial.

This triumph for the drug, which is already available in Japan, comes after the European Medicines Agency approved it last month.

Daprodustat sits within Glaxo’s new and specialty drug division, whose nearly £10 billion in sales in 2021 made it the best performing part of its pharmaceuticals business last year.

At the same time, AstraZeneca’s Enhertu, which it has developed with Japan’s Daiichi Sankyo, has been granted ‘Priority Review’ status following a successful clinical trial.

Enhertu is used as a treatment for adults with unresectable or metastatic non-small cell lung cancer, whose tumors have a HER2 mutation and who have received a prior but unsuccessful therapy.

According to AstraZeneca’s latest results, Enhertu registered sales of $214 million in 2021 but if this latest development leads to full approval, the firm will hope it can reach the much-vaunted ‘blockbuster’ status – $1 billion in annual sales.

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Soho-based cyber security firm SEON raises £72m from Silicon Valley fund

London-based fraud prevention business that works with businesses like Revolut and airline KLM has raised $94 million (£72 million) from a Silicon Valley investor.

The series B funding round for Soho-based SEON was led by Silicon Valley-based venture capital business IVP, which has also backed the $52 billion cybersecurity company Crowdstrike and cyber risk modeling business Cyence.

Michael Miao, a partner at IVP who joined the board of SEON, said the company was “making a remarkable dent in fraud prevention by making it easy for every business to adopt its data-driven solution.”

SEON uses machine learning to build a picture of a customer’s digital footprint using their email address, phone number and IP address and spot potential fraudulent or fake accounts.

The company counts fintech business Revolut and airliner KLM among its customers. It has used its technology to review over 1 billion customer transactions and estimates that it has prevented over €50 million in fraudulent transactions.

Criminals stole over £750 million through fraud in the first half of 2021, according to a study by UK finance.

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