Proactive Investors -
- FTSE 100 inches lower at the open
- House prices rise 1.1% in February - Halifax
- Retail sales increase 5.2% in February - BRC
FTSE 100 in cautious mood
London’s blue chip index edged lower in opening exchanges with investors in cautious mood ahead of the testimony by Federal Reserve chair Jerome Powell to the US Congress.
At 8.15am the FTSE 100 was at 7,923.56, down 6.23 points, or 0.079% while the FTSE 250 slipped to 20,034.33, down 29.78 points, or 0.15%.
Richard Hunter, head of markets at interactive investor, commented “Investors are largely unwilling to take the plunge ahead of two vital indicators later in the week, with most markets treading water in the meantime.”
“Federal Reserve Chairman Powell’s Congressional testimony and the non-farm payrolls report are the undoubted highlights of the week. Taken together, the two events will provide the latest update on the immediate past, present and future of the world’s largest economy and will be crucial in determining market sentiment.”
Back in London and there was plenty of data and corporate updates for investors to digest.
UK house prices unexpectedly rose last month as recent reductions in mortgage rates and improving consumer confidence helped boost demand, according to the latest Halifax House Price Index.
Prices rose 1.1% between January and February, a surprise swing to positive and ahead of City forecasts for a 0.3% fall. House prices were up 2.1% compared with February 2022. Housebuilders failed to take heart with Persimmon PLC down 0.6% and Bellway down 0.2%.
One share on the move in the FTSE 100 was Ashtead Group PLC which rose 3.3% in early exchanges.
The construction equipment rental group said it expected its profits to surpass previous forecasts this year, as it plans to continue expanding in North America.
Ashtead posted US$609mln in operating profit in the three months to January 31, compared with US$449mln in the same period last year.
“Our business is performing well with clear momentum in strong end markets, which are enhanced by the increasing number of mega projects and recent US legislative acts,” said chief executive Brendan Horgan in a statement.
“We now expect full year results ahead of our previous expectations and the Board looks to the future with confidence,” he added.
John Wood Group soared 12% after it revealed it had rejected a fourth bid approach from Apollo Global Management valuing the firm at 237p per share.
“The board believes this latest proposal continues to undervalue the group and is therefore minded to reject,” the company said.
“The board will continue to engage with its shareholders and intends to engage further, on a limited basis, with Apollo,” it added.
On 22 February, John Wood announced it had unanimously rejected three unsolicited proposals from Apollo.
Greggs PLC was little changed after reporting a healthy increase in sales and a slight improvement in profit.
The baker reported total sales up 23% to £1,513mln from £1,230mln in 2021 while pre-tax profits edged 1.9% higher to £148.3mln from £145.6mln.
Like for like sales improved 17.8% year-on-year and diluted earnings per share grew to 117.5p from 114.3p. A final dividend of 44.0p per share was declared taking the total payout to 59.0p from 57.0p.
The FTSE 250-listed firm baker is targeting 150 net openings in 2023 and sees a clear opportunity for significantly more than 3,000 UK shops in time.
Solid growth in sales but profits only edge higher at Greggs
Greggs has reported total sales up 23% to £1,513mln from £1,230mln in 2021 while pre-tax profits edged 1.9% higher to £148.3mln from £145.6mln.
Like for like sales improved 17.8% year-on-year and diluted earnings per share grew to 117.5p from 114.3p. A final dividend of 44.0p per share was declared taking the total payout to 59.0p from 57.0p.
The FTSE 250-listed baker is targeting 150 net openings in 2023 and sees a clear opportunity for significantly more than 3,000 UK shops in time. Around 500 shops are now open until 8pm or beyond with further development planned for 2023 while 1,270 shops are now operating delivery services, generating about 5% of sales overall.
Looking ahead, Greggs said like-for-like sales in company-managed shops up 18.8% in the first nine weeks of 2023, in line with expectations and reflecting the impact of Omicron in the comparator period.
The firm remained confident in prospects for 2023, and the medium-term opportunity to become a significantly larger multichannel business.
John Moore, senior investment manager at RBC Brewin Dolphin, said: “Greggs has delivered good sales growth, but not much of that has landed in the bottom line – with like-for-like sales up 17.8% and profits just 1.9% ahead of the previous year."
"Rising costs are undoubtedly a big part of that story, but the company is taking good steps towards mitigating those increases and continuing to grow through measures like later trading hours and new shop openings."
Surprise rise in house prices in latest Halifax survey
UK house prices unexpectedly rose last month as recent reductions in mortgage rates and improving consumer confidence helped boost demand, according to the latest Halifax House Price Index data.
Prices rose 1.1% between January and February, a surprise swing to positive and ahead of City forecasts for a 0.3% fall. House prices were up 2.1% compared with February 2022.
Instant Info – Halifax UK House Price Index pic.twitter.com/O9P0F4XySN— BuiltPlace (@BuiltPlace) March 7, 2023
“Recent reductions in mortgage rates, improving consumer confidence, and a continuing resilience in the labour market are arguably helping to stabilise prices,” said Kim Kinnaird, director at Halifax Mortgages.
“Still, with the cost of a home down on a quarterly basis, the underlying activity continues to indicate a general downward trend,” he added.
“With average house prices remaining high housing affordability will continue to feel challenging for many buyers,” he continued.
The figures are in contrast with data released earlier in the month by the mortgage provider Nationwide, which reported that house prices fell on the month.
Retail sales rise in February - BRC
Retail sales held up better than expected in February as consumers proved they are still ready to celebrate events such as Valentine's Day despite the-cost-of living crisis, according to the British Retail Consortium-KPMG Retail Sales Monitor.
Total UK retail sales were up 5.2% in February against an increase of 6.7% for the same month last year, below the three-month average of 5.5% and above the 12-month average of 2.4%.
Food sales increased by 8.3% over the three months to February and non-food sales were up 3.2% while online non-food sales fell by 3.1% against a decline of 28% last February.
BRC Chief Executive Helen Dickinson said: "While the cost-of-living crisis has made customers increasingly price-sensitive, they are still ready to celebrate special occasions.
"This helped deliver strong sales of fragrance and jewellery for Valentine's Day. Energy-saving appliances also continued to sell well, but the rush for warm coats and boots subsided as the January sales splurge satisfied customer appetite."
“The economic backdrop means retailers face volatile trading conditions. Many consumers will be concerned as they prepare for further energy price and tax rises in April."
Gabriella Dickens, senior UK economist, at Pantheon Macroeconomics said: "The most recent BRC data suggest retailers experienced some relief from the recent downward trend in retail sales in February, most likely reflecting a small rebound in consumers’ confidence."
"A pause in the downward trend seems plausible given that GfK’s headline measure of consumers’ confidence rose to an 11-month high in February."
"But we doubt it means consumers are going to hurry to the shops and splurge, given that GfK’s measure still was well below its average since 1978, +9," she added.
She still expects "retail sales to be around 0.2% lower in Q2 than in Q4 2022, before then recovering gradually over the following six months."