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Pubs toast business rates cut and alcohol duty changes, as FTSE 100 slips back

Spirits on the bar

European markets have given back of some of yesterday’s gains, with the DAX and FTSE 100 posting modest losses, with most of the focus on today’s UK Budget from chancellor of the exchequer, Rishi Sunak. While a lot of the Budget content had been pre-trailed, there were some announcements that helped to move specific sectors.


The change in alcohol duties to a more simplified version with the amount based on the alcoholic content of the drink was particularly significant and was expected in part. The Chancellor decided to go further, by reducing the tax on draught beer and cider by 5%, while the planned increase on spirits was also cancelled.

While the change in alcohol duties was welcome for pubs and restaurants especially, and equivalent to a nice glass of wine with the meal, the 50% cut to business rates for the likes of hospitality and retail, was the equivalent of the after-meal glass of port, as the likes of JD Wetherspoon and Mitchells & Butlers rose to the top of the FTSE 250, while Marstons has also seen decent gains on the day. 

UK banks also saw a reduction in the surcharge on profits from 8% to 3%, however this was also widely expected.

The cut in domestic air passenger duty, along with the extra ultra-long-haul band for flights of over 5,500 miles doesn’t appear to have had much of an impact on the airlines, with very little movement in the likes of Ryanair and easyJet, who probably had most to gain.

Housebuilders appear to be shrugging off the cladding surcharge and focusing on the pledge to spend up to £24bn on more affordable housing, with modest gains for the likes of Taylor Wimpey, Barratt Developments, pushing up to the top of the FTSE 100. 

GlaxoSmithKline shares have edged higher after Q3 sales rose 5% to £9.1bn, prompting the pharmaceutical giant to up its full year guidance to an adjusted EPS decline of between -2% to -4%, whilst reconfirming the outlook for 2022. The consumer healthcare division, which is the topic of much debate over whether it should be demerged saw sales of £2.5bn, a rise of 3%. The company declared a dividend of 19p a share. CEO Emma Walmsley has been under pressure from activist shareholders over her suitability to turn the underperforming business around, as she comes under increasing pressure to lay out a timeline for the sale or spin-off of its consumer business and direct its focus more squarely on its pharmaceuticals business. She said that progress has continued towards unlocking the value of the said business, with a view to a demerger in mid-2022. 

Deutsche Bank shares have slipped back despite beating expectations on their Q3 numbers. Revenues came in at just over €6bn, beating expectations of €5.79bn. FICC revenue came in lower at €1.59bn, a 12% decline from last year, but above most forecasts, while pre-tax profits rose 15% to €554m, helped by a €156m reduction in non-performing loans. Year to date, profits before tax came in at a healthy €3.3bn, with the bank reaping the benefits of the volatility and deal making seen in markets this year, which is offsetting the drag from its retail bank and the negative interest rate environment there. Mangement were non-committal on a dividend this year but didn’t rule out a pay-out sometime in 2022.

Spanish bank Santander has also seen its shares slide despite reporting a decent profit in its Q3 numbers. Net profits rose 24% to €2.17bn helped by a strong rebound in its European and North American businesses, as revenues rose to €11.93bn. The improvement in profits was helped by the release of loan loss provisions of €120m, and a strong performance in its UK mortgage business. This also bodes well for Lloyds and NatWest results later this week. Loans and customer deposits were both higher than the start of the year, with the bank saying it was confident of beating its full year ROTE profitability target for 2021 of 10%.


US markets have seen a little bit of mixed start to the day, after yesterday’s record highs, as investors mull over a tsunami earnings announcement.

US durable goods orders for September came in slightly better than expected, declining 0.4%, against an expectation of a 1.1% decline, although August was revised modestly lower. 

Concerns that Twitter might be hit by the privacy changes implemented by Apple turned out to be slightly overstated although Q3 revenues did fall slightly short of expectations at $1.28bn. It was still a 37% year on year increase; however, the bar had been set slightly higher at $1.29bn. Instead of a profit Twitter slumped to a loss of $0.54c a share, largely due to the settlement of a class action. The company saw monetizable daily active user growth, coming in at 211m, in line with expectations, a rise of 13% year on year. For Q4 Twitter said it expects to generate revenues between $1.5bn and $1.6bn.

It was another decent quarter for Microsoft, with Q1 revenues beating expectations of $44bn, coming in at $45.32bn, a rise of 22% year on year, although it was a modest slowdown from the record revenue numbers seen in Q4. Profits came in at $2.27c a share, also beating expectations. Its Azure and Intelligent cloud business saw revenue rise to $16.96bn, a rise of 31%, while personal computing, and gaming saw a rise of 12% to $13.31bn. This is expected to pick up in Q2 with the rollout of Windows 11, supply issues not withstanding as well as expectations that revenues from Office 365 will increase. For Q2 Microsoft expects to set a record for revenues above $50bn, at between $50.15bn and $51bn.

Alphabet also had a decent quarter, generating record profits in Q3, despite fears that Apple’s privacy changes might hit its advertising income. Total revenues came in at $65.12bn while profits rose to $18.9bn or $27.99c a share. Google’s cloud division was a notable outperformer as it continued its trend of reducing the level of its losses, as it attempts to play catch-up to the market leaders of Amazon and Microsoft in this space.

Google was able to shrug off the worst effects of the Apple privacy changes due to its heavier focus on its own Android operating system which hasn’t been affected by those changes, although its revenues from YouTube did see a modest drag because of the iOS changes. Revenue from advertising came in at $53.6bn and helped offset the shortfall in YouTube ad revenue and Google Cloud Sales. YouTube revenue came in at $7.2bn, below the consensus of $7.5bn, while cloud revenues came in at $4.99bn, below consensus of $5.04bn. Nonetheless, this comes across as nit-picking at a time when costs have gone up sharply due to the recruitment of 18,000 extra staff over the last 12 months.

Robinhood Markets shares have slid sharply after Q3 revenues missed expectations as a collapse in crypto trading and decline in meme stock activity saw trading turnover plunge. Total revenue for Q3 came in at $364.9m, well short of the $423.9m estimates. Crypto revenue fell back to $51m from $233m set in Q2, which is quite a drop-off. The drop off in crypto revenue is a particular worry given the recent rise to record highs, after all if people don’t trade when news flow around bitcoin hitting record highs is front of mind, you have to question when they will. Losses came in at $1.32bn with the company warning that Q4 revenue could be even lower at $325m.

Boeing’s latest Q3 numbers have seen revenues come in short at $15.3bn, while losses came in at $0.60c a share which was bigger than expected. The shortfall on revenue rather surprisingly has come from defence and space division falling 3.4% year on year to $6.62bn, however its commercial aviation division performed much better than expected. The bigger than expected loss was due to a $183m in additional costs in relation to delays on its 787 Dreamliner. On the plus side, the company was able to limit cash burn to $507m in cash for the quarter, much better than expected. Despite the bad numbers the shares appear to be holding up well.


The Canadian dollar has surged after the Bank of Canada unexpectedly cut its weekly asset purchase program to zero, while also indicating that rate hikes could start and come quicker in 2022. The central bank had been expected to reduce its bond buying to C$1bn a week, so this move was unexpected especially given the recent monthly contraction in GDP. The bank also upgraded its inflation forecast to 3.4% from 2.4%, with 2-year Canadian yields also surging, on course for their biggest one day rise in a decade. Today’s move by the central bank appears to have caught bond markets seriously offside.

Talk of a possible rate rise next week when the RBA meets, has seen the Australian dollar retest its highs from last week, after the latest weighted Australian median CPI numbers hit a six year high of 2.1% in Q3. The debate has shifted quite markedly in the last few weeks from speculation about delaying the tapering of its asset purchase program, due to new lockdowns, to following in the footsteps of the RBNZ earlier this month and pulling rates off their current record lows of 0.1%.

The pound has come under pressure today, and not because of the budget but largely because of some profit taking after the currency hit six-year highs against the yen last week and a 20-month high against the euro. With a Bank of England meeting next week speculation has been rife that the central bank might signal an increase in rates. Some of that speculation is now being tempered. 


Crude oil prices slipped back from their recent highs from yesterday after the latest API inventory data showed a surprise build of 2.3m barrels last week. The latest EIA data also showed a similar big build in weekly inventory, a rise of 4.7m barrels against an expectation of 1.9m. With surprise builds also manifesting themselves in gasoline and distillate inventories the question being asked is have we reached the potential tipping point that might trigger demand destruction?

Gold prices are treading water after yesterday’s sharp sell-off, with a modest decline in US 10-year yields, and a slightly flatter curve, helping to underpin prices.

Bitcoin prices have slipped back below $60,000, after failing to follow through with any conviction after setting new record highs.

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