Diageo flags slowdown in growth, Chemring trades as expected

London open

The FTSE 100 is expected to open 42 points lower on Friday, having closed up 0.73% on Thursday at 7,455.67.

Stocks to watch

Drinks giant Diageo said it expects to see a slowdown in growth in the second half due to a weaker performance in Latin America and the Caribbean. Latin America and the Caribbean (LAC), one of its five key regions which accounts for 11% of group net sales values, is now expected to see an organic net sales decline of more than 20% in the second half compared with last year. For the first half, organic operating profits for the group as a whole are now expected to be down on the previous year mainly due to LAC's declining sales, higher trade investment, lower operating leverage and adverse mix resulting from downtrading.

Chemring reported that its trading performance up to 31 October was in line with expectations on Friday, with an expected year-end net debt of approximately £14.4m. Strong operating cash conversion enabled the company to invest in growth opportunities, increase dividends by 20%, and deploy £9m into a share buyback program. The firm said it experienced robust market conditions, particularly in the energetic materials and devices sector, where it secured substantial contracts and plans to invest in increasing capacity to support future growth, while also reshaping its US Sensors business to focus on biological detection and security markets.

Newspaper round-up

Thames Water has pumped at least 72bn litres of sewage into the River Thames since 2020 – roughly equal to 29,000 Olympic swimming pools – new figures reveal. Water firms have no legal obligation to report the amount of sewage discharged, only the number of hours that it was released. But campaigners argue this data is insufficient as this does not properly quantify how much sewage is in England’s rivers. – Guardian

Vehicle breakdowns caused by Britain’s pothole-ridden roads reached record levels this year, according to the RAC. The motoring organisation said it received almost 6,000 calls for pothole-related incidents from July to September – its highest total for the relatively benign summer period since it started collecting data in 2006. – Guardian

NatWest is preparing to block the majority of Dame Alison Rose’s £10m-plus exit payout over her role in the Nigel Farage debanking scandal, according to reports. The board of the bank has decided to dock the exit package of NatWest’s former chief executive and confirmation was expected as soon as Friday morning, according to Sky News. – Telegraph

Shell is suing Greenpeace for $2.1 million after activists from the environmental group occupied one of its vessels to protest against its North Sea oil drilling plans. The oil major claimed that it had incurred significant costs after six Greenpeace activists boarded a ship carrying a floating production, storage and offloading vessel in January as it was en route to a shipyard in Norway. The activists occupied the vessel, which is ultimately intended for use at the Penguins field in the UK North Sea, for 13 days. – The Times

Shareholders in Metro Bank have been warned that the lender risks being put into resolution by the Bank of England if they do not support a £925 million rescue package at a vote this month. Metro said on Thursday that it would hold a meeting on November 27 to secure shareholder approval for the emergency funding deal it struck last month. – The Times

US close

US stocks dropped on Thursday, with the S&P 500 falling for the first time in nine sessions, after the head of the Federal Reserve refrained from calling time on interest-rate hikes and a Treasury sale went poorly.

The S&P 500 finished 0.8% lower at 4,347, having risen 6.5% since hitting a five-month low of 4,117 on 27 October. This eight-day run was the index's longest streak since November 2021. The Dow Jones Industrial Average fell 0.7%, while the Nasdaq dropped 0.9%.

"While operating in a macro news vacuum, stocks traded lower as investors were left dodging higher US yields after a rough long bond sale and a rare rally pushback from chair Powell," said Stephen Innes, managing partner at SPI Asset Management.

In a scheduled speech, Fed chair Jerome Powell said higher rates could be necessary if inflation doesn't come down towards the target.

"We know that ongoing progress toward our 2% goal is not assured. Inflation has given us a few head fakes," he said, adding: "If it becomes appropriate to tighten policy further, we will not hesitate to do so."