BUSINESS LIVE: Retail sales and  consumer confidence weaken; Telegraph launches formal sale; IHG sales boost

Just before close, the FTSE 100 was 1.15% down at 7,413.38.

Meanwhile, the FTSE 250 was 0.81% lower at 17,073.88.

What’s happening to house prices? Are energy bills set to fall further? What’s the latest on inflation? Which companies have reported results and what shares are on the move?

If you want to know the answers to these questions and more, tune in to This is Money’s new twice-weekly video show Lunch Money, which is coming soon.

The vogue currently among small- and microcaps, if you can call it that, is to raise modest sums by selling shares at bargain-basement prices.

In order to tempt risk-averse investors out of hibernation, discounts have regularly been set at 50 per cent, with one unfortunate AIM struggler forced to drop the value of its stock by more than 80 per cent to bring in new funds.

The sales process to acquire the Daily and Sunday Telegraph and The Spectator has formally commenced.

Lloyds Banking Group seized control of the Telegraph Media Group and magazine from the Barclay family in June after talks between the parties over outstanding debts totalling more than £1billion broke down.

The price of petrol and diesel remains artificially high as retailers are refusing to pass on cheaper wholesale costs to motorists quickly enough, fresh analysis has revealed.

Retailers are accused of pocketing profits at drivers’ expense, with the AA claiming ‘old habits die hard in the fuel trade’ as they persist with lowering pump prices far slower than they should.

Inertia has long been the enemy of savers, and new research reveals that not switching accounts could be costing them £1,500 worth of interest.

In the next few months savings inertia could cost us a fortune, according to stockbroker Hargreaves Lansdown.

(PA) – The profits of Britain’s biggest high street banks and how their customers are holding up against the cost-of-living squeeze will be in the spotlight again when the lenders unveil their latest financial results.

Barclays, Lloyds Banking Group and NatWest Group are due to update shareholders on their third-quarter earnings and outlook for the year.

Investors will be watching the high street lenders closely for signs that customers are being squeezed by higher interest rates, which have pushed up borrowing costs throughout the year.

An important metric in their financial results will be expected credit losses or impairments, which show how much cash banks are setting aside to cover “bad debts” when customers fall behind on loan repayments.

It comes as UK interest rates have risen from 0.1% to 5.25% in less than two years.

Barclays could set aside around £570million according to an analysis consensus compiled for the bank, significantly more than the £380million in credit impairment charges this time last year.

The global banking giant is expected to report a pre-tax profit of £1.8billion, down from the £2 billion reported a year ago.

Peter Rothwell, the UK head of banking for KPMG, said the lag between interest rates going up and borrowers feeling the pain of higher costs could mean the large banks are beginning to see the true impact on their customers.

He told the PA news agency: “At the moment, consumers and businesses are proving to be very resilient in the face of increasing pressure.

“But realistically, how long can that continue to last?”

Britain’s woeful undersupply of housing at an affordable price can be partially blamed on shareholder handouts paid by the country’s biggest housebuilders, a new report claims.

(Reuters) – Pret A Manger is planning to expand its U.S. footprint more than five-fold to 300 stores by 2029, CEO Pano Christou told Reuters on Friday, as the British sandwich and coffee chain looks to double the size of its overall business.

Privately-held Pret has struck a partnership with its existing franchisee Dallas International to accelerate its U.S. expansion through new openings, store renovations and by introducing new formats like drive-thrus, Christou said.

With about 58 U.S. outlets currently, Pret is focused on opening more stores in regional and suburban areas and targeting transport hubs to draw new customers, moving beyond its traditional focus on cities and office-oriented locations.

A similar move in the UK in 2021 helped Pret revive its business after a sweeping shift to work-from-home shuttered stores and crimped sales during the pandemic.

Christou added Pret was growing ten times faster outside of urban centres in the UK, where it has more than 450 stores.

“The impact of COVID really acted as a catalyst for us to evolve the business. (Pret’s products are) not developed for (just) white-collar workers… There are people irrespective of whether they’re in downtown Manhattan or in the suburbs that enjoy that product,” Christou said in an interview.

Popular among office workers and commuters, Pret in 2021 outlined plans to double its business by 2026 and has since then entered several new markets.

The company was on track to achieve the goal two years ahead of expectations, Christou told Reuters.

Intercontinental Hotels Group expects to close out 2023 with ‘very strong’ financial results, despite ‘financing challenges’ hurting its ability to launch new hotels.

The FTSE 100-listed Holiday-Inn owner’s revenue per available room (RevPAR) – a key performance indicator for the hotel industry – was up 10.5 per cent in the third quarter compared with last year.

Consumer confidence in the UK has slumped this month as high inflation continues to pile pressure on household finances.

GfK’s long-running Consumer Confidence Barometer – which gauges how Britons view their own finances and the wider economy – gave a reading of -30 for October, a nine-point drop on September.

Britain knows all about crisis in the bond markets and how quickly events can spin out of control.

Efforts by Liz Truss and Kwasi Kwarteng to restore the Tory low tax narrative crashed to earth, forcing them out of Downing Street as the price of gilt-edged stock crashed, yields soared, the cost of mortgages shot up and pensions came close to imploding.

Victoria Scholar, head of investment at Interactive Investor:

‘Risk-off sentiment continues to grip European markets with the Stoxx 600 slumping to a 7-month low and DAX, CAC and FTSE MIB shedding around 1% each in today’s session.

‘Trading has resumed as normal today on the LSE after an incident temporarily disrupted activity on Thursday.

‘A weak session overnight in Asia has dragged Anglo American to the bottom of the FTSE 100 while safe-haven gold miner, Endeavour Mining is at the top of the basket as investors flock to safety assets.

‘The conflict between Israel and Gaza has pushed gold to a three-month high and sparked further gains in the oil market with Brent crude breaking back above $93 a barrel.

‘The 10-year Treasury yield rose to 5%, the highest level since July 2007 on Thursday after four straight days of gains. But comments from Fed Chair Jay Powell helped it pull back from the highs – he signalled that the central bank is likely to keep rates on hold in November, refraining from another hike at its next decision meeting.

‘Nonetheless Powell reiterated the Fed’s commitment to bringing inflation back down to 2%, warning that it is still too high.’

The FTSE 100 is trading 0.7 per cent lower at the open as industrial metal miners slip and a rise in long-term bond yields keep investors away from risky assets.

The surge in 10-year US benchmark yield overnight to briefly touch 5 per cent has raised borrowing costs around the world.

Adding to the declines, industrial metal miners have shed 1.6 per cent as copper prices fell on a strengthening dollar.

British retail sales fell more than expected in September as shoppers delayed buying autumn clothing due to unseasonably warm weather, along with broader cost of living pressures.

Sterling weakened against the US dollar after the data.

IHG expects to close out 2023 with ‘very strong’ financials as the Holiday Inn-owner reported a rise in quarterly revenue per room on strong travel demand. Still, shares are down 2.8 per cent.

Helena Davies, partner at law firm Brabners:

‘Retailers will be relieved to enter the Golden Quarter after September added to a mixed Summer of sales.

‘However, fragile consumer confidence has the potential to limit how successful the crucial trading period will be. Falling prices in areas such as food and drink is encouraging to see. But two years of cost-of-living pressures will force many into tightening discretionary spending on gifting and festivities.

‘Retailers may also think twice about further discounting, following this week’s consumer price index, which pointed to a £415million rise in business rates for the sector next year unless the Chancellor intervenes.’

America is only beginning the battle to bring down inflation, the US Federal Reserve head warned as bond markets were hit by renewed volatility.

Fed chairman Jerome Powell said yesterday that signs of an overheating economy could mean interest rates may have to rise again.

Elon Musk saw around £7.5billion wiped off his fortune as a slump in profits at the electric car maker sent shares tumbling.

In New York, the stock fell as much as 9 per cent, shaving £57billion off the company’s value, reducing the value of Musk’s stake – though his holding is still worth £75billion and he remains the world’s richest person.

Aled Patchett, head of retail and consumer goods at Lloyds Bank:

‘The falling sales suggest that, despite the inflation rate easing on essentials like food, consumers remain cautious with their monthly household budgets.

‘However, our latest UK Sector Tracker shows that in September, prices charged by food and drink manufacturers fell at the fastest rate in more than three years. This could help foster greater spending habits and lead to further cost drops being passed through to consumers.”

‘Retailers are acutely aware that consumers continue to prioritise their spending, including reining back from branded and big-ticket purchases. Despite these factors, a slowing rate of food price inflation could influence shoppers’ decision making

‘Companies eager to boost sales in the final months of the year will be hoping a combination of falling inflation and a flurry of discounts are enough to fuel consumer spending.’

Telegraph Media Group and the Spectator magazine have launched a formal sale process, in a deal that could fetch £600million.

In June, restructuring group AlixPartners said Bank of Scotland had appointed receivers for the shares of the publisher’s owners, who failed to repay loans from the bank.

The receivers said they would look for ways to recover the debts for the bank, which is a member of the Lloyds Banking Group.

In August, London-listed publisher National World had confirmed its interest in the Telegraph group, which owns the newspapers, and the company that runs The Spectator.

National World is sounding out potential investors to help finance a bid for the group, Reuters reported.

Silvia Rindone, EY UK&I retail lead:

‘A combination of supressed and unpredictable demand and higher interest prices are starting to affect the retailers that didn’t use the pandemic period to realign their businesses. Those that continued not to invest in stores, propositions or customers are finding that shoppers are choosing to go elsewhere.

‘Looking further ahead, the EY ITEM Club Autumn Forecast predicts a mixed picture for consumer spending, which is expected to benefit from several supports over the coming months.

‘Falling energy bills and easing food prices and inflation means overall inflation should decline to a predicted average of 7.4% this year, before falling to 2.9% in 2024.

‘As we enter the final ‘golden’ quarter of the year, pricing and inventory will be key priorities for retailers and brands.

‘Last year, many consumers delayed spending as late as possible to help manage their finances leading to heavy discounting much earlier than normal. Retailers will need to consider what impact this may have on cash flow at a critical time of the year.’

Retail sales slumped 0.9 per cent in September as evidence mounts that UK consumer strength is weakening, fresh data from the Office for National Statistics shows.

Separate figures from the GfK consumer confidence index on Friday show British consumer confidence has tumbled, reflecting households’ renewed concerns about the outlook for their personal finances and the broader economy.