Proactive Investors -
- FTSE 100 retreats from session peak of 7,678.45
- Dow holds gains after weak ADP (NASDAQ:ADP) jobs report
- UK service sector still growing but at a slower pace
Double Direct
Analysts at Citi have double upgraded their rating for Direct Line to 'buy' from 'sell', noting that their industry channel checks give more confidence on 2023 motor earnings.
The analysts said Direct Line’s share price decline of around 40% in the year-to-date and a 32% reduction in 2023 consensus earnings per share estimates mean the risk is now skewed to the upside.
"We believe there is sufficient solvency self-help to avoid an equity raise, that the motor pricing cycle has bottomed out, and DLG's current circa 5.3x 2024E price-to-earnings represents an attractive entry point," they said.
The Citi analysts said they believe consensus motor earnings have now sufficiently reset following the company’s full-year 2022 results and that are now at the bottom of the motor pricing cycle.
In late afternoon trading, Direct Line shares were up 6.8% at 1583.20p, below Citi’s new price target of 188p.
Dow manages to gain
The FTSE 100 index held just off session highs as US stocks started mixed on Wednesday albeit with recession fears reignited by a series of weaker-than-expected US economic data this week.
Around 20 minutes after the New York market open, the Dow Jones Industrials Average had managed to add 96 points, or 0.3% at 33,499, but the broader S&P 500 was down 0.1%, and the tech-laden Nasdaq Composite shed 0.6%.
On the data front today, ADP US private sector payrolls by fell more than expected in March coming in at 145,000, far below the consensus analyst expectation of 200,000.
“The data adds to evidence that the labour market is starting to cool and comes ahead of Friday’s closely watched non-farm payroll report,” commented FOREX.com market analyst Fiona Cincotta.
However, Pantheon Macroeconomics senior US economist Kieran Clancy noted that the ADP employment report has been a poor guide to the initial official payroll estimate since the ADP rebuilt and relaunched its model back in August last year.
“The upshot is that the ADP number ought not to be taken seriously; our forecast for March payrolls—based on the contemporaneous Homebase data and the lagged NFIB hiring intentions index—is 250,000 though we expect payroll growth to slow markedly in the second quarter,” Clancy said.
Mind the pay gap
Banks are among the worst offenders in regard to men being paid more than women, according to new research, led by HSBC’s UK business which had a 51.5% gap in wages and a 77% gap in bonuses.
Currently, more than 80% of companies pay male employees more than women on average, with the gap now larger than in 2017 when organisations were first forced to begin reporting.
The gender pay gap is the difference between men's and women’s median pay expressed as a percentage of the average man’s salary.
The total average was 12.2% in the 12 months to 4 April, against 11.9% in 2017/18 and in line with last year.
In the finance sector, the gender pay gap was much higher than the national average, dropping only slightly year-on-year to 22.7% - the second highest industry behind education.