Hargreaves Lansdown share price dives as it warns trading surge will end

Liam Roche
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Hargreaves Lansdown share price dives as it warns trading surge will end

Hargreaves Lansdown says the pandemic brought about a generation of lockdown investors

The Hargreaves Lansdown share price fell by more than 11% on Monday morning as the investment platform warned the pandemic-induced boom in trading may not be here to stay.

The FTSE 100 company added that the pandemic has, however, brought about a generation of lockdown investors.

Hargreaves Lansdown confirmed a record number of customers joining the investment platform throughout the year ending in June.

The Reddit movement focused on Gamestop and AMC stocks were a particular source of demand, as equity dealing volumes increased by 54%.

However, as lockdowns came to an end, the investment platform confirmed that the surge in trading activity did the same thing, bringing about the dramatic fall in its share price seen today.

Hargreaves Lansdown saw its profits fall by 3% compared to the year before to £366m as its costs rose.

During the previous financial year, 83% of new clients were below the age of 55, while 98% of trades on the platform are now being done online.

“This younger mix of clients underpins our future growth because their investment behaviours mirror the trends of previous cohorts: we know what they need from our 40-year track record of supporting clients through their financial lives. As we work with these new clients on similar paths, the lifetime value of our overall client base will increase,” CEO Chris Hill said in his review of the results.

Hargreaves and Lansdown’s total dividend for the year was down 8% to 50.5 pence per share.

Moving forward, the company is expecting to see stronger client activity in the coming year with investment in the client engagement experience on the cards.

“We have delivered a record performance and exceptional growth during an extraordinary and challenging year. Our investment in the scalability, diversity and resilience of HL’s business model has resulted in a record 233,000 net new clients and £8.7 billion of net new business in the period, taking total clients to 1.645 million and assets to £135.5.”

“This has been an extraordinary year and I am proud of how our colleagues responded and continued to deliver to clients throughout this challenging period. We have not furloughed our people, enacted any COVID related redundancy programmes or sought any Government assistance,” Hill said.

Octopus Renewables Infrastructure Trust invests in floating offshore wind developer

Liam Roche
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Octopus Renewables Infrastructure Trust invests in floating offshore wind developer

ORIT’s investment entitles it to around a 12% interest in Simply Blue Holdings

Octopus Renewables Infrastructure Trust (ORIT) confirmed on Monday that it has invested €7.5m (£6.4m) into Simply Blue Holdings Limited.

Simply Blue Holdings Limited is the parent company of the Simply Blue Group (SBG), a developer of sustainable marine projects focused on floating offshore wind.

SBG has developed a pipeline of over 9GW of floating offshore wind projects to-date, primarily in the waters of the UK and Ireland.

SBG also has interests in wave energy and ancillary interests in sustainable aquaculture, in addition to its background in marine development. The company is headquartered in Cork, Ireland, with offices in the UK and the US.

ORIT’s investment, which is a co-investment alongside another fund managed by Octopus Renewables Limited, entitles it to around a 12% interest in SBG.

Phil Austin, Chairman of Octopus Renewables Infrastructure Trust plc, gave his view on ORIT’s first investment into a renewable energy developer, as well as our first investment in the fast-growing offshore floating wind sector. “This investment will further diversify ORIT’s potential to create capital growth and may in time bring opportunities to invest in construction-ready assets arising from SBG’s development pipeline,” Austin said.

Chris Gaydon, Investment Director at Octopus Renewables, added: “We are delighted to be working with Simply Blue, a leading marine project developer with a highly experienced and best-in-class management team. Floating offshore wind is a particularly exciting renewable energy sector which is expected to undergo rapid growth over the years to come and is a key part of government decarbonisation plans in a number of European countries. We believe Simply Blue is very well positioned to capture this growth.”

ORIT is an investment trust listed on the London Stock Exchange, operating a diversified portfolio of renewable energy assets in Europe and Australia. Managed by Octopus Investments Limited, ORIT aims to provide investors with sizable and sustainable dividends, alongside capital growth.

The company produces 502GWh of electricity per year, powering 114,000 homes through clean energy. ORIT estimates that 79,000 tonnes of carbon emissions are avoided as a result of its operations. This is the equivalent to 389,000 new trees.

Overseas buyers still see significant value in the London stock market

Liam Roche
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Overseas buyers still see significant value in the London stock market


The FTSE 100 is down by 0.31% during the morning session on Monday after weak Chinese trade figures and with few other company or economic updates to funnel sentiment in any particular direction.

““Much of the action centred on the M&A arena. Tobacco giant Philip Morris launched a hostile takeover bid of more than £1 billion for inhaler specialist Vectura, a US private equity firm planted the seeds for a bidding war on supermarket Morrisons with a request for extra time to make an offer and a German rival took a stake in takeaways platform Deliveroo,” said AJ Bell financial analyst Danni Hewson.

The continuing acquisitions of public companies in the UK suggests overseas parties still see significant untapped value in the London stock market.

“In the commodities markets both gold and oil took a hit overnight – with the precious metal dropping to a five-month low and crude falling on fears that lingering travel restrictions will hit demand,” Hewson added.

“Given that much of 2021 has been dominated by mounting concern over the impact over inflation and gold has traditionally offered protection against rising prices, fans of the precious metal will be particularly disappointed by its high single-digit slide in percentage terms year-to-date.”

FTSE 100 Top Movers

SSE (3.22%), Severn Trent (1.14%) and Anglo American (0.94%) are leading the way during the first session of the week.

Hargreaves and Lansdown (-9.95%), Smiths Group (-1.69%) and Persimmon (-1.7%) are trailing the pack of FTSE 100 companies on Monday.

Ocado to allow staff to work from abroad

Liam Roche
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Ocado to allow staff to work from abroad

Ocado said that having the opportunity to work abroad was commonly requested at townhall meetings

Employees at Ocado (LON:OCDO) have been told they are allowed to work from any location in the world for one month per year as the company looks to adapt its practices to the post-pandemic world.

Thee groceries delivery company devised the policy in response to its workers who voiced their desire to work remotely during the pandemic.

A number of major companies have been devising their own strategies to deal with worker demands and office rents in the aftermath of the pandemic.

Ocado confirmed that having the opportunity to work abroad was commonly requested at downhill meetings, particularly by people who have family in different countries.

The Times reported that Ocado chief executive Tim Steiner spent a lot of time during the pandemic working from his parents’ home in the Bahamas.

KPMG’S UK-based staff have been instructed that they are able to work in the office for only two days per week, while Twitter’s employees have been told they can work from home on a permanent basis.

However, not all companies feel the sam, as some believe in the benefits of developing employees within a communal environment.

Goldman Sachs chief executive David Solomon rejected remote working as a “new normal” and labelled it an “aberration”.

The Ocado share price is down by 1.22% during the morning session on Monday.

Since 27 January the Ocado share price is down from 2,883p to 1,780.50p, a fall of 62%.

Gold price falls to lowest point in four months

Liam Roche
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Gold price falls to lowest point in four months

Over the course of the last month, gold is down by 5%

Gold prices fell to their lowest point in four months on Monday morning as rumours fly that the Fed could be set to raise interest rates sooner than anticipated.

After gold went below $1,750, it triggered a stop loss sale, bringing it down further to $1,684.

Over the course of the last month, gold is down by 5%.

The recent fall follows jobs figures from the US Labor Department that surpassed expectations, as wages recovered.

The positive results have, however, raised concerns over the possibility that stimulus measures could now be rolled back.

Traders of the yellow metal will now turn their attention to this China’s CPI inflation data today.

China’s CPI is expected to come in at 0.8% year-on-year, while inflation at a producer level is not expected to slowdown, with PPI at 8.8% year-on-year.

Aramco profits rise almost four times boosted by increase in oil prices

Liam Roche
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0
Aramco profits rise almost four times boosted by increase in oil prices

Brent crude has risen to around $70 per barrel after OPEC+ agreed to cut oil production

Aramco, the Saudi Arabian energy giant, saw its profits surge by nearly 300% thanks to an increase in the price of oil as demand recovers across the world.

The company, which is one of the biggest in the world, confirmed that vaccinations, the easing of restrictions, stimulus packages and the resurgence of economic activity have all played a part in its results.

Since the beginning of 2021, crude oil prices have risen by more than 30%, as Aramco’s net income rose by 288% to $25.5bn (£18.4bn) for Q2.

It surpassed analysts’ expectations of a net income of around $24.7bn for the quarter.

Brent crude has risen to around $70 per barrel after OPEC+ agreed to cut oil production.

The company’s chief executive also provided a positive outlook for the remainder of 2021.

“Our second quarter results reflect a strong rebound in worldwide energy demand and we are heading into the second half of 2021 more resilient and more flexible, as the global recovery gains momentum,” Amin Nasser said in a statement.

Saudi Aramco’s chief executive added that while the dividend could rise in the future, the company had identified an opportunity to increase its maximum output capacity.

Oil producers in the western world anticipate having to cut their production over the coming years, as pressure piles on from governments and investors to change to more renewable forms of energy.

“Seeing that there is a lot of under-investment in [oil] supply it’s a great opportunity for us. We are diligently working to increase capacity,” Nasser said.

Saudi Aramco’s largest shareholder is the Saudi Arabian government with 98% of its shares. It is the kingdom’s primary source of revenue.

Taking a view of Cineworld

Andrew Hore
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Taking a view of Cineworld

Cinema operator Cineworld (LON: CINE) reports its interims on Thursday and this should provide an indication on how its takings are improving. Nearly all the cinemas are back up and running and attendances need to build up, so the group stops losing money.
Peter Rabbit 2 was apparently a success but the continued progress in attendances requires other successful films.
Interims
Cineworld will make a significant first half loss and its cinemas only started to open in April. The full year loss is expected to exceed $700m and much of that could be in the first half.
These figures in themselves ar...

Non-farm payrolls surpass expectations as worker shortage eases

Liam Roche
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Non-farm payrolls surpass expectations as worker shortage eases

943,000 jobs added to US economy in July

The unemployment rate in America fell to 5.4% on Friday as the US labour markets saw an additional 943,000 jobs in July.

The news comes as a signal that worker shortages that have hindered the US recovery are beginning to ease.

The non-farm payroll data far exceeded economists’ expectations for 870,000 new jobs, the the Bureau of Labor Statistics revealed.

Policymakers are keeping a close eye in the numbers as it could influence future policies geared towards aiding the continuation of the US recovery from the Covid-19 pandemic.

Robert Alster, CIO at investment management firm Close Brothers Asset Management comments: : “Payrolls continue to paint a positive picture of the US jobs market, but the Fed will be keeping a close eye on the detail before making any decisions.”

“Companies are still struggling to hire, with job gains constrained by either not enough workers, the wrong workers in the wrong place, or the wrong jobs at the wrong salaries. Teen workers currently make up a higher proportion of the labour market than usual, and Powell’s dashboard reveals an uneven recovery in terms of diversity and inclusion.”

Some companies have increased wages, while others have offered other incentives.

The figures may be masking something a little more troubling for the US economy, suggests Hinesh Patel, portfolio manager at Quilter Investors:

“The recent surge in Delta cases will not be picked up by these numbers and as such employment figures will remain a little volatile and difficult to interpret. This could even be somewhat of a highpoint for US employment for some time. Furthermore, the Delta variant has shown how vulnerable the global economy is to new strains of the virus emerging and creating new waves.”

“But for now, the Fed will be hoping everyone returns to work and offices in September once the Delta surge has eased off, confidence resumes and vaccination rates improve. The biggest problem the Fed has is the fact that the participation rate remains at a near 40-year low and they seem to think they have influence over this. This pandemic has changed the way the economy works and ushered in new waves of automation. This is something that they will struggle to control over the longer-term and will mean fiscal support will need to step up even as the recovery continues,” Patel added.

Ryanair share price could see last minute rush as confidence returns to travel sector

Liam Roche
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0
Ryanair share price could see last minute rush as confidence returns to travel sector

Airline Industry

The Ryanair share price (LON:RYA), €16.82 at the time of writing, is set to close in the black for the third week in a row. The recent upwards move follows a positive set of results from the company and a brightening of the outlook of the airline industry more generally. However, while the Delta variant is hampering the global economic recovery, investors remain somewhat cautious about diving back into the stock which has had an up-and-down 2021 so far. This article will provide an update on the airline industry, as well as examining Ryanair’s position moving ahead.

Airline Industry

The mood around air travel has brightened over the past few weeks with passenger numbers climbing and destinations being opened up. However, any optimism is very much cautious as the sector was traumatised by its wort-ever crisis as a result of the pandemic.

It has been a long road, but gradually, the vaccine roll-out has allowed for the easing of some travel restrictions, with the path to full recovery becoming more achievable.

Willie Walsh, who runs global airline trade body Iata, told the Financial Times: “The recovery has definitely started in the second half, there are signs of things improving, restrictions being relaxed or removed, and we have to take positives from that.”

The number of planes in the air has risen to its highest level worldwide since the pandemic began, according to Citigroup.

However, the recovery across the world has been uneven. In addition, the Delta variant has threatened to throw a spanner in the works on a number of occasions in a variety of locations. The UK has significantly eased restrictions on travel for those who have been vaccinated.

Furthermore, people’s desire to go abroad remains very high. “What we are seeing empirically is there is nothing wrong with the consumer,” said Jozsef Varadi, chief executive of Hungary-based Wizz Air. “We think the desire to travel is totally intact.”

There are many reasons for investors curious about the Ryanair share price to be positive about the recovery. However, they must also be aware of the very real risks.

Ryanair

Ryanair confirmed a sharp rise in bookings at the end of last month while the low budget airline raised its forecast for passenger numbers over the coming year as travel restrictions are being eased across the continent.

However, the Irish company posted a €273m loss for the quarter between April and June, as lockdowns meant the majority of flights were cancelled amid ongoing caution.

The low budget airline said its mini-recovery was thanks to vaccinations, as well as the easing of isolation rules for travellers who have taken the vaccine, and the EU’s digital travel pass which the EU introduced at the beginning go July.

These factors have given Michael O’Leary, the chief executive of Ryanair, a degree of confidence over a sustained recovery for the industry, after the pandemic continued to test his company throughout the pandemic.

With a surge in bookings coming from continental Europe, Ryanair will increase its number of flights in operation during the end of summer. 

While the airline is still facing challenging circumstances, it suggested that it will end the fiscal year “somewhere between a small loss and breakeven” as restrictions are there to stay for now.

Danni Hewson, financial analyst at AJ Bell, said:

“Could a last minute rush rescue Ryanair’s year? While the summer has been heavily affected by the continued strict restrictions on travel throughout Europe, the company is seeing notably higher bookings both for late summer holiday bookings and the winter,” Hewson said. 

“This demonstrates how resilient demand for foreign holidays remains, particularly among the fully vaccinated cohort which now have a little more freedom to travel.”

“If people are booking now given all the uncertainty and hassle involved in flying then you could imagine a more rapid ascent when, hopefully, we finally emerge from the pandemic.”

Price Forecast

Davy, the wealth management company, recently retained its ‘outperform’ rating for Ryanair. The group said its medium-term outlook is “stellar”, and therefore the Ryanair share price is the only one with an outperform rating.

The stockbroker has a target of €18 for the Ryanair share price.

Energy bills to increase by at least £139m for millions of UK households

Liam Roche
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0
Energy bills to increase by at least £139m for millions of UK households

It is the largest rises in energy bills in over a decade

Energy bills for as many as 15m homes will increase by at least 15% from October as record-high gas costs mean the price cap will be lifted.

Ofgem, the gas and electricity markets regulator, said that 11m households on standard tariffs will see a 12% increase to £139 per year, while an additional four million will be faced with a 13% increase to £153.

It is the largest rise in energy bills over the last ten years which could squeeze families across the country, as the furlough scheme comes to an end.

Ofgem said the increase was the result of “a rise of over 50 per cent in energy costs over the last six months with gas prices hitting a record high as the world emerges from lockdown”.

“Gas prices have risen to a record high in Europe due to a recovery in global demand and tighter supplies. This is increasing the cost of heating homes and pushing up electricity prices,” the regulator added.

Ofgem chief executive Jonathan Brearley told the BBC that customers should shop around for the best possible deal, as there are opportunities to make significant savings.

“You don’t have to live with this tariff. The price cap is a backstop. We’d encourage any customer, particularly those struggling to pay their bills, to contact their supplier, and get access to a wide-range of help and support,” he added.

“Millions of household budgets are already stretched to the limit and this massive increase could not be coming at a worse time.”

The new rate will come into effect on October 1 for customers on their supplier’s default tariffs.

Domestic energy bills are directly linked to wholesale prices, the price at which energy businesses have to pay for gas and electricity.

After gas prices soared to a record high as the world economy recovered from the pandemic, wholesale prices jumped too, as there was a surge in demand for energy.

“A confluence of factors occurring at the same time has caused the recent bull run with record low gas storage, outages, continual/prolonged production issues and active Asian buying,” said Nick Campbell, a director at consultancy Inspired Energy.

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