Proactive Investors -
- FTSE 100 up 13 points at 8,282
- AB Foods (LON:ABF) shares fall as Primark sales reverse
- Royal Mail (LON:IDSI) letter consultation by Ofcom calls for service improvements
'Car sales should rise in second half, but lag other big-ticket spending'
On the SMMT car sales figures, economist Rob Wood at Pantheon Macroeconomics, says he expects big-ticket consumer purchases to "pick up in the second half of the year as rises in consumer major purchase intentions, in response to building expectations of further Bank of England interest rate cuts".
"With consumers also having rebuilt their rainy day savings, they will likely feel able to switch from saving to spending."
He notes that car registrations have been performing worse than the major purchases balance of the GfK’s consumer confidence survey and trends in household income suggest.
"That may reflect car market specific factors, such as the swings in used car prices, changes to government incentives for purchases, and uncertainty after the previous government pushed back to 2035 the switch to zero emissions cars to 2035.
"Even so, we expect private car sales to rise in the second half of the year, but they will probably lag the rest of household demand."
UK car sales inch up, led by battery EVs
UK new private car registrations rose 0.1% last month to around 32,100, while total sales, including business and fleet purchases, were down 1.2% year-on-year at roughly 84,600.
Battery electric car demand rose 10.8% in the month as buyers responded to a summer of heavy discounting and the launch of several new models, the Society of Motor Manufacturers reports.
The market share for battery EVs rose to 17.2% last month, and the trade body forecasts it to rise further to 18.5% by the end of the year.
"Despite this growth, this will still be shy of the 22% required by the Zero Emission Vehicle Mandate," the SMMT says.
London in the green
The FTSE 100 is moving higher, up 10 points now, while the FTSE 250 is up 35 points.
Insurers, including Beazley (LON:BEZG), Phoenix Group, Legal & General.; utilities including Severn Trent (LON:SVT), United Utilities (LON:UU), SSE (LON:SSE), are prominent among the top risers, which points to bond shifts being behind this.
Housebuilder Vistry is top of the blue-chip leaderboard though.
Top of the mid-caps is Alfa Financial Software Holdings PLC after reporting first-half revenues down 1.1%, in line with its previous update, and EBITDA 9% ahead of expectations.
Given its strong pipeline, Alfa has raised its full-year revenue guidance by £1 million.
Analyst thoughts on Royal Mail, ASOS (LON:ASOS)
Ofcom's proposals are "at least partially consistent" with what Royal Mail previously requested, says analyst Alexander Paterson at Peel Hunt (LON:PEEL).
But he notes that the regulator continues to state that Royal Mail must improve its service levels and become more efficient, with no mention of softening the delivery targets as Royal Mail had requested.
"The timeframe for change is also much longer than Royal Mail had hoped for, and may not conclude until after the decision on regulatory approval and indeed potential closure of the offer from EP."
As for ASOS, it is "on the front foot", with its actions to secure the balance sheet position and a trading update where it says profits should be at the top end of guidance, says fellow Peel Hun analyst John Stevenson.
ASOS is selling 75% of Top Shop into a Bestseller joint venture for £135 million, retaining control of the brand from a trading perspective and paying a royalty into the JV, and is set to issue £250 million convertible bonds.
AstraZeneca employees arrested
Shares in AstraZeneca PLC (LON:AZN) are down 0.5% as we see news that police in China have detained five current and former employees of the pharma giant.
They are being questioned about potential illegal activities, Bloomberg is reporting, citing some people familiar with the matter.
This brings back memories from just over a decade ago, when AZ was one of several drugmakers that were ensnared in a Chinese bribery investigation, where execs from rival GSK (LON:GSK) were found to have been engaged in bribery.
Chinese police investigated an AZ employee in 2013 over the company's drug pricing in the country.
Ex-divs weigh on the index
An extra brake on the Footsie this morning is that it's ex-dividend day for several stocks, but the index has actually moved into positive territory. up just over two points.
DS Smith (LON:SMDS), Croda International, IAG, Aviva (LON:AV), Admiral, Antofagasta (LON:ANTO) and Prudential (LON:PRU) have all gone ex-div today, which results in a combined subtraction of just over four points from the index today.
Admiral shares are down 2.1%, DS Smith 1.9%, Aviva 1.7%, ANTO 1% and British Airways (LON:ICAG) owner IAG 0.8%.