OFgem imposes £5.4 million fine on Morgan Stanley for communication failures during trading Activities led by Live Commentary
Published: 08:36 BST, 23 August 2023
The FTSE 100 has seen a 0.4% increase in early trading. Companies such as Home REIT, Costain, and Mulberry are providing trading updates and reports today. Read the business live blog for Wednesday 23 August below.
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Morgan Stanley fined £5.4m by OFgem for WhatsApp communication mishap
Morgan Stanley, the US banking giant, has been fined over £5.4 million by Britain’s energy regulator, OFgem. The fine was imposed because the bank’s energy traders used private WhatsApp discussions to communicate. OFgem stated that Morgan Stanley failed to take reasonable precautions to prevent the use of communication methods that cannot be handed over to investigators when requested.
Market opens with 0.4% gain in FTSE 100; FTSE 250 up by 0.3%
The FTSE 100 has shown a positive trend in early morning trading, with mining stocks leading the way due to gains in metal and gold prices. Additionally, Reckitt Benckiser’s shares rose after the announcement of its chief financial officer’s retirement next year. Industrial metal miners have seen a 1% increase, making them the top-performing sector thanks to higher base metal prices. Personal care, drug, and grocery store companies have also recovered after a previous sell-off, with a 0.5% rise, supported by Reckitt Benckiser’s 0.4% gain.
Microsoft initiates £60bn bid for Activision
Microsoft has put forward a revised offer of £60 billion to acquire Activision Blizzard in an attempt to gain approval from UK regulators. The US technology giant had to submit a new bid after the Competition and Markets Authority (CMA) rejected the initial deal with the aim of safeguarding innovation and choice in cloud gaming.
“Markets return to a holding pattern” ahead of Powell’s speech
Richard Hunter, Head of Markets at Interactive Investor, stated that markets have entered a holding pattern as two significant events approach that could impact investor sentiment. The upcoming speech by Federal Reserve Chair Powell at the Jackson Hole symposium is eagerly anticipated as it is expected to provide insights into the central bank’s current thinking. Investors are increasingly accepting the probability of higher rates for a longer duration to combat inflation. However, there is still uncertainty regarding the possibility of further rate hikes. Meanwhile, US markets experienced a slight downturn, particularly in bank shares due to tough operating conditions. Despite this, the main indices have shown strong performance year to date, with the Dow Jones increasing by 3.4%, the S&P500 by 14%, and the Nasdaq by 29%. The FTSE 100 has maintained a marginal gain in early trade, while the mining sector has shown some tentative buying interest. The market is likely to focus on macro matters as the latest quarterly earnings season progresses. So far this year, the FTSE 100 has seen a 2.2% decline, underperforming its global peers.
Arm expresses concerns about Chinese business ahead of US stock market listing
As Arm prepares for the largest US stock market listing in nearly two years, the chip designer has raised concerns about economic and political risks in China. Arm, which is owned by Japanese investor SoftBank, generates almost a quarter of its revenues from China and states that it is particularly vulnerable in that market.
Itsu experiences sales recovery as employees return to the office
Despite a strong comeback last year as employees returned to the office, Asian food chain Itsu’s business remains below pre-pandemic levels. The restaurant division reported £101 million in sales in 2022, lower than the £114.7 million in 2019 but a 73% increase from 2021. Itsu’s profits reached £6.5 million, a 42% rise from 2021, supported by commuters’ return to towns and cities.
Home REIT surrenders 100 property leases in an effort to stabilize its portfolio
To stabilize its portfolio, Home REIT, a struggling homeless housing business, has agreed to surrender leases on 100 properties with a total of 418 beds. The investment trust expects this move to generate a sustainable income stream with significantly higher rent collection, despite the lower headline rent. AEW, as the Investment Manager, sees this transaction as part of its strategy to stabilize the company’s portfolio, ensuring the current occupiers of the properties are not impacted.
M&S likely to rejoin FTSE 100, while Persimmon faces FTSE 250 relegation
Marks & Spencer is on track to rejoin the FTSE 100 after a four-year absence due to its successful turnaround efforts. FTSE Russell’s update suggests that the retailer will be one of four companies promoted to the blue-chip index in the next quarterly reshuffle. On the other hand, housebuilder Persimmon could face relegation to the FTSE 250 as the property market suffers from rising interest rates.
Ofgem fines Morgan Stanley for communication failures during trading activities
Energy regulator Ofgem has imposed a £5.4 million fine on Morgan Stanley for failing to record and retain electronic communications related to trading wholesale energy products. The fine relates to the period between January 2018 and March 2020. Ofgem’s regulatory director of enforcement and emerging issues, Cathryn Scott, emphasized the importance of compliance with REMIT rules and the integrity and transparency of wholesale energy markets. While Morgan Stanley Investment Products (MSIP) has taken steps to prevent future breaches, this fine serves as a strong message to market participants.
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