Many Brits to be squeezed financially in October

Liam Roche
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Many Brits to be squeezed financially in October

Furlough scheme, VAT holiday Universal Credit uplift and stamp duty holiday all come to an end

October looks set to be a decisive month for the finances of Brits as household costs rise while the Government is set to cut its support for households.

The furlough scheme, the VAT holiday, the Universal Credit uplift and the stamp duty holiday all end on 30 September.

While an energy price cap comes in on 1 October, pushing costs up by £140.

Additionally, food costs are rising, with ongoing supply chain issues driving them higher.

The furlough scheme ending is expected to lead to a rise in people being made redundant.

“The latest figures show that 1.6m people are still in furlough and even the bosses at the Bank of England are expecting a spike in unemployment as the scheme is wrapped up,” says Laura Suter, head of personal finance at AJ Bell.

The energy price cap is going to increase bills for the average customer by £140 from 1 October, but many will see rises far higher than this.

“Usually you’d be far better off getting off your provider’s standard variable tariff and locking in a fixed-rate deal, but the energy market is so barmy at the moment that no one is offering a fixed deal for a cheaper price than the energy cap,” says Suter.

“This means everyone needs to face up to rising energy bills, just as we head into the colder months. If your deal has ended you need to weigh up whether you want to secure a fixed-rate deal now, at a higher cost than your current price, with the expectation that you’ll be protected from rising energy prices. Or you can stick with the energy price cap rate and gamble that recent gas price rises end soon.”

Anyone who has been to the supermarket recently may have noticed that their weekly bill has been rising.

“A combination of shipping issues, driver shortages, supply chain issues and a leap in demand have all lead to a spike in prices – in July we saw the largest monthly rise in food costs,” says Suter.

“While you can’t directly combat rising prices, you can reduce your food bill. There are lots of offers out there for using online grocery delivery services for the first time, which can get decent discounts on a shop. Or you can go back to the old-fashioned methods of sticking to your list, meal planning and budgeting.”

Housing market slows as savers keep stashing cash

Liam Roche
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Housing market slows as savers keep stashing cash

Analyst expects gradual rather than sharp slow down in housing market

Mortgage approvals in the UK slowed down for the third consecutive month in August as the market continues to cool on the back of a surge during the pandemic.

Mortgage providers approved 74,453 home loans, down from 75,100 in July.

The drop comes after the government’s stamp duty holiday was scaled back.

While August saw a small rebound in borrowing compared to July, the £5.3bn borrowed is 20% lower than the average for the past 12-months.

“Approvals for house purchases, which are the figures that give us an insight into what future months look like, show a slight reduction on the past year but are still above pre-pandemic levels,” says Laura Suter, head of personal finance at AJ Bell.

“Rather than seeing a total drop off a cliff, as many have feared, it’s likely that the housing market will just gradually slow down as the final end of the stamp duty holiday arrives and many of the people who wanted to move in the race for space will have done so.”

“The nation’s frugal lockdown saving ways have not been dented by being able to go out and spend more, with us all saving £9.1bn in August – almost double the usual savings amount we saw pre-pandemic. However, savers were rewarded with yet another drop in savings rates to yet another historic low.”

With no signs of the Bank of England raising rates and inflation being high, and poised to shift even higher in the coming months, diligent savers are being clobbered from both sides.

“A mini rates war in some corners of the savings market has improved the best buy rates, meaning there are some options out there for those willing to shop around. And anything is better than leaving it dwindling in your current account earning 0.01% interest – at that rate you’d need £100,000 in savings just to get £10 back each year in interest,” says Suter.

Borrowing on credit cards, personal loans and car finance rose slightly but is still about a third of what it was in pre-pandemic times.

Three key things investors look for before deploying capital

Liam Roche
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Three key things investors look for before deploying capital

With advancements in technology, investing is being democratised like never before. However, with more power comes more responsibility for founders and investors. Founders and investors are still humans who are susceptible to making costly mistakes.

“We see thousands of Enterprise Investment Scheme qualifying investment opportunities each year,” Andrew Aldridge, Partner at Deepbridge Capital. “We screen companies based on stringent criteria, including the protectability of the Company’s intellectual property, the global market they are targeting, their revenues to date, and much more. However, it is the people behind the product or service which are ultimately the reason behind why we invest and for this there is no one-size-fits-all.”

However, the key attributes that commonly set great entrepreneurs apart include resilience, drive, teamwork and an understanding of their own limitations.

Resilience

Those who have experience running their own business will know that things rarely go as planned, even if the owner has a perfect business plan. However, resilience can steer a business through tough times.

“It is also important that founders have the drive to grow a business and aim for an exit opportunity in line with investors’ goals. When raising venture capital, it is important the entrepreneurs realise that their goals need to be aligned and the business cannot drift,” says Aldridge.

Team

It may seem obvious but it is vital to hire the right people. A founder who shows the ability to work in and lead a team, is therefore critically important or you’ll find your capital being used up on hiring and firing and not progressing with long-term committed professionals.

Play to Your Strengths

The final key point is that founders need to have the humility and self-awareness to understand their own weaknesses and where help is required. “For example, academics may know the science and purpose of their life-changing discovery, but they may not have the commercial experience to build a business or the sales aptitude to take the product to market,” Aldridge says. Only by understanding their gaps can the founders then bring in the required team-members to expedite the growth of the Company. Understanding one’s own weaknesses is very much a strength.

FTSE shrugs off sell-off in US and Asia

Liam Roche
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0
FTSE shrugs off sell-off in US and Asia

The FTSE 100 was off to a solid start on Wednesday morning, up by 0.72% at the time of writing at 7,078.80.

“If investing is often about climbing a wall of worry, then market participants arguably face the equivalent of the Matterhorn right now but on Wednesday investors seemed to be undaunted,” says AJ Bell investment director.

This is despite a big sell-off in Asia and the US overnight, with tech stocks leading the way down.

“The global energy crisis is really just the latest manifestation of a wider shortage of stuff as demand has flooded back in the wake of the pandemic,” Mould adds.

Then you have specific pressure points like the crisis around Chinese property developer Evergrande and the latest in what feels like a series of periodic battles over the debt ceiling in the US.

“Against this uncertain backdrop central banks are having to weigh up inflation risks which, like chewing gum on the sole of a shoe, are proving stickier than they’d hoped.”

To counter the threat posed by rising prices they face the prospect of dialling down economic support at a time of mounting uncertainty over the recovery.

FTSE 100 Top Movers

Next (3.04%), Ferguson (2.42%) and Segro (2.4%) are leading the way on the FTSE 100 on Wednesday morning.

Royal Mail (-5.4%), Admiral and Smith (-2.04%) and Nephew (-1.5%), have not fared so well so far, as the trailing three companies on the UK index.

Next increases full-year outlook as profits surge to £347m

Liam Roche
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Next increases full-year outlook as profits surge to £347m

Next also warned against stock levels due to supply chain issues

Next has raised its forecast again, as the retail outlet thinks its fill-year profit could reach its highest point since 2016, having seen its trading levels “materially exceed expectations” during H1.

The clothes seller anticipates its profit before tax for 2021 will rise to £800m, the highest point in five years.

Since its shops re-opened in April, Next says its sales have surpassed expectations, while online deals have fallen back somewhat.

“The positive sales trend has continued through August into the second half, despite significant stock shortages caused by Covid-19 disruption to international supply chains,” Next said.

Although Next did warn that ongoing supply chain issues meant that its stock levels were not optimal, which means its sales are vulnerable.

Next chief executive Lord Wolfson said the retail bounce-back from the coronavirus pandemic was “far stronger than we anticipated”. 

“Sales in retail stores have done better than planned, while online sales have fallen back less than we expected. It appears that the wider economy has not suffered the long term damage many feared, for the moment at least. And, in particular, employment has held up well,” he added.

The Next share price is up by 2.75% during the morning session on Wednesday.

“Next is a best-in-class UK retailer so if even it is struggling to navigate staffing and supply chain issues then you know its peers will be really under the pump,” says Russ Mould, investment director at AJ Bell.

“The company is also very upfront with its guidance, so you know you are getting an unfiltered version of events.”

“Trading may have been better than expected in recent months, supporting an increase in full year guidance, but the company is clear on the risks it faces heading into the key Christmas trading period,” says Mould.

Mastercard to offer buy now, pay later feature

Liam Roche
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Mastercard to offer buy now, pay later feature

Mastercard joins competitors Monzo and Revolut

Mastercard is set to implement the “buy now, pay later” feature on its cards as it becomes the biggest player to now do so.

The service will allow people to pay via interest-free instalments, across the UK, US and Australia.

Mastercard’s move is only the latest as a number of company’s are exploring new versions of credited.

Other firms to do so include Revolut and Monzo, while Apple are said to be exploring an offering in that area.

Craig Vosburg, Mastercard’s chief product officer, said that Mastercard Installments was “a digital-focused way to pay today and tomorrow, delivered through consumers’ most trusted relationships with their banks and other lenders, at merchants of their choice”.

Critics are of the view that it is not neccessarily a good thing for customers as they are likely to take on more debt.

Castillo Copper has option to secure two prime lithium projects

Liam Roche
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0
Castillo Copper has option to secure two prime lithium projects

Projects located in Australia and Zambia

Castillo Copper (LON:CCZ), a base metal explorer primarily focused on copper across Australia and Zambia, announced on Wednesday that it has entered into a 90-day option agreement to acquire – subject to due successful due diligence – two granted, highly prospective lithium projects.

The Litchfield and Picasso Lithium Projects are located in prime regions in the Northern Territory (NT) and Western Australia (WA) respectively.

Castillo confirmed it has the option for 90-days to acquire – subject to successful due diligence – two highly prospective lithium projects in prime locations:

  • Litchfield Lithium Project (Northern Territory) is contiguous to Core Lithium’s (ASX:CXO) strategic Finniss Lithium Project which has JORC compliant ore reserves (7.4Mt @ 1.3% Li2O), with production slated to commence in H2 20221
  • Picasso Lithium Project (Norseman region, WA) is proximal to Liontown’s Resources’ (ASX: LTR) Buldania Project, with a JORC compliant resource at 14.9Mt @ 0.97% Li2O3, and has mapped pegmatites4 that potentially host lithium mineralisation

Simon Paull, Managing Director of Castillo Copper, commented: “This is a strategic acquisition to complement our existing copper assets and strengthen Castillo’s exposure to critical metals for the clean energy transition. We consider the projects to be highly prospective and they are situated in prime locations nearby to proven Lithium reserves.”

“By focusing on developing copper and lithium projects, the Board is positioning Castillo to potentially create significant incremental value from the transition towards renewable energy sources and accelerating demand for electric vehicles globally.”

The Castillo Copper share price is down by 0.56% during the morning session on Wednesday.

New AIM admission: GreenRoc Mining’s battery-powered prospects

Andrew Hore
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0
New AIM admission: GreenRoc Mining’s battery-powered prospects

GreenRoc Mining has acquired the Greenland-based mining assets of Alba Mineral Resources (LON: AMR) in return for shares that provide the AIM-quoted mining company with a majority stake.
The Amitsoq graphite project will take the eye of many investors. This has graphite suitable for using in the manufacture of lithium-ion batteries and demand will increase as more electric vehicles are produced.
The project that may commence production first, though, is Thule Black Sands, which has ilmenite. This project is near to AIM-quoted Bluejay Mining’s Dundas mineral sands project.  
GreenRoc raise...

Tip update: Transense progressing to profit

Andrew Hore
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0
Tip update: Transense progressing to profit

Strong growth in royalty revenues for the iTrack technology is helping Transense Technologies (LON: TRT) to finance additional investment in developing Surface Acoustic Wave (SAW) technology and products.
In the year to June 2021, revenues increased from £603,000 to £1.77m – iTrack generated £832,000, which is all profit. The launch of a new version of the Translogik tread depth, pressure and temperature probe boosted revenues from £510,000 to £764,000. The SAW business does generate revenues but its loss offsets the profit from the other activities.
The switch to royalty revenues for iTrack e...

Private rental prices could remain high for UK tenants

Liam Roche
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0
Private rental prices could remain high for UK tenants

Research carried out by LandlordBuyers.com shows that rental prices in the UK have risen by 10.6% since 2015.

UK house prices are rising and there is a record-breaking number of aspiring homeowners
registering with estate agencies, as the rental market also remains busy as ever.

Private rental prices in the UK rose by 1.2% in the last 12 months.

When divided regionally, private rental prices grew by 1.1% in England, 1.5% in Wales and 1.2% in Scotland over the past year.

London was the only region which saw an annual decrease in private rental prices (of negative 0.1%).

The figures are raising questions over the sustainability of rental prices.

LandlordBuyers.com Managing Director, Jason Harris-Cohen, said:

“Rental prices will always rise where there are more tenants than available properties and in our experience, the UK rental market is continuing to see strong demand at present.”

“Despite a pandemic, moving activity in the UK rental market has remained buoyant – and perhaps you could say rental demand is at such high levels because of the pandemic, with people moving for re-evaluated lifestyles and working practices. The statistics suggest that even as a semblance of normal life resumes, we will keep the same pace in the private rental sector. We expect rents to keep rising, although incrementally, and voids to stay low.”

“Rents are slightly too high at present but this is simply a byproduct of the supply and demand situation in the UK. Research from Propertymark revealed 68% of agents said they saw landlords increase rents in June 2021, compared to 60% in March 2021 Additionally, when looking at the year-on-year statistics, this figure has more than doubled since April 2019. If more lets become available, however, we may start to see rents fall,” said Harris-Cohen.

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