FTSE 100 Live 27 October: Rishi Sunak’s Budget, GlaxoSmithKline results, Microsoft and Google earnings, BT takeover talk

THE economy will boom this year and next, according to fresh forecasts today from the Office for Budget Responsibility.

Chancellor Rishi Sunak said in his Budget speech today the financial watchdog had increased its forecast for the rise in GDP this year from 4% to 6.5%. That represents a strong bounce-back from the pandemic.

In 2022, the economy will grow another 6%. The economy will return to its pre-Covid level at the turn of this year – earlier than previously forecast.

The OBR is less optimistic about the years after 2022, when it predicts the economy will grow at 2.1%, 1.3% and 1.6%. Those forecasts are highly vulnerable to events in the future.

Shares in GSK enjoyed a lift as it unveiled sales of £9.1 billion in its third- quarter results, beating analyst expectations of £8.7 billion.

Sales of blockbuster shingles drug Shingrix recovered from a pandemic slump, rising by 41% to £502 million and lifting group vaccine sales to £2.2 billion.

Pharmaceuticals revenue was up 5% to £4.4 billion led by a 34% rise in sales of cancer therapies.

And consumer sales were up 3% to £2.5 billion.

GSK confirmed it is preparing to move 800 staff from its landmark HQ in Brentford, west London, to a new campus for the consumer division and will appoint a chair to head up the new company in the next quarter.

Shares, which are up 10% so far this year, rose 3.5% to 1483.0p this afternoon.

GSK has recruited a top US geneticist to strengthen the scientific credentials of its board as it circles the wagons around under-fire CEO Emma Walmsley.

The FTSE 100 drugs-maker has hired Dr Harry ‘Hal’ Dietz, a lecturer at leading research college.

The Johns Hopkins University and a former president of the American Society of Human Genetics, as a non-executive director.

He will also sit on the science committee, scrutinising research, performance and acquisitions at the new vaccines company.

Santander’s third quarter profits were boosted by write-backs from pandemic-era provisions, continued momentum in the mortgage market, and changes to its popular 123 current account, the Spanish bank said today.

Pre-tax profits rose 19% to £687 million in the quarter. The jump came as the bank wrote back £100 million from loss provisions taken during the pandemic. It takes total write-backs so far this year to £170 million.

Operating costs in the quarter also fell by 7% to £579 million. The bank has been embarking on a cost cutting drive that includes relocating its headquarters to Milton Keynes and shutting over 100 UK branches. Santander said today that £666 million of transformation spending had realized £404 million in cost savings to date.

In its core business, the bank was boosted by strong demand for mortgages as the UK’s property market continues to see surging prices despite the end of the Stamp Duty holiday. Santander has lent £5.2 billion in mortgages so far this year. Chief financial officer Jose Garcia Cantera told Bloomberg TV the bank was seeing the strongest demand for UK mortgages in “many, many years.”

Chancellor Rishi Sunak is due to deliver his third budget in a little under an hour and a half. Businesses will be watching closely for any announcements that could affect them, with a backdrop of soaring costs and rising taxes.

Businesses are hoping for tax breaks, support loans, and help on training and skills to address gaps in the jobs market.

Aldi is increasing the size of its London store portfolio by opening three new branches.

The chain currently has 51 shops in the capital and it said three more will open before the end of the year. Its first site in London opened in 1995 in Feltham.

A new site will open in Harringay (Green Lanes) on October 28, and branches in Orpington and Cheam will respectively start welcoming customers on December 2 and December 9.

As Big Tech’s earnings bonanza builds a head of steam on Wall Street, investors in London are again being left frustrated by a lack of similar action on this side of the Atlantic.

Traditional sectors such as banking, mining and retail continue to dominate the FTSE 100 index, although there was some changing of the guard today as cyber security firm Darktrace entered the top flight in place of supermarket Morrisons.

Shares in the Bradford-based retail chain were today halted at 286.4p after its private equity takeover by Clayton, Dubilier & Rice crossed the finishing line.

That left the way for Darktrace to complete its rapid transformation into a blue-chip company, just six months after its chief executive Poppy Gustafsson launched the business onto the stock market at a price of 250p a share.

The company is now trading at 711p for a valuation of £5 billion, although the honeymoon period for the AI-focused security specialist appears to be over after one City firm’s “sell” recommendation sent shares sharply lower on Monday. It dipped another 22.5p today.

One of the handful of other tech stocks in the FTSE 100 is Aveva, with the Cambridge-based industrial internet-of-things company today reporting revenues growth of 9% at the half way point of its financial year. Its shares have been under pressure since early September and were down another 44p to 3594p today.

Mining stocks were also weaker as the FTSE 100 index fell from last night’s 20-month high, down 24.01 points at 7253.60. Wall Street’s S&P 500, meanwhile, has been trading at a record high after a run of positive earnings updates, including from Microsoft.

The FTSE 250 index fell 2.73 points to 23,158.88, although FirstGroup rose 5.05p to 101.2p after it invited shareholders to tender their shares at 105p under plans to distribute £500 million from recent US disposals. Activist investor Coast Capital Management, which holds a 12% stake, has said it will participate in the tender offer in full.

Weaker mining stocks meant the FTSE 100 index fell slightly from last night’s 20-month high, down by just 4.7 points to 7272.92.

Anglo American and Glencore were 2% lower, while industrial software company Aveva declined 60p to 3580p after a brief trading update revealed revenues growth of 9% in the first half of the year.

Catering group Compass was the biggest riser in the top flight, lifting 30p to 1524p as investors drew comfort from a solid trading update by French food services rival Sodexo.

The FTSE 250 index was 8.23 points higher at 23,169.50, led by FirstGroup after it launched a tender offer as part of plans to distribute £500 million to shareholders following its recent US disposals.

Activist investor Coast Capital Management, which holds a 12% stake, has said it will participate in full. Shares were 5.85p higher at 102p, compared with the tender offer price of 105p.

MONZO is in talks with shareholders to raise another £300 million to fund expansion plans.

The digital based lender, founded in 2015, is one of the best known of the new breed of “challenger” bank, aimed at shaking-up the sector.

According to Sky News, the fund raiser would value the business at £3 billion, a fairly extraordinary price for a business that lost £130 million in the year to February. That came atop £114 million of losses the year before.

It aims to make a profit next year.