Proactive Investors -
- FTSE 100 up 58 points
- Energy bills to rise again
- Retail sales drop sharply
11.54am: Sainsbury’s climbs as latest buyback kicks off
J Sainsbury PLC (LSE:LON:SBRY) climbed on on Friday after announcing the latest tranche of its £200 million share buyback scheme had commenced.
The final £50 million worth of shares would be bought back by February 24, a statement said.
Some 54,797,296 ordinary shares collectively worth £150 million had been repurchased as of last month, following the announcement of the buyback in April, Sainsbury’s added.
Shore Capital analysts noted Sainsbury’s remained “very attractive” in the wake of the news, highlighting a free cash flow-funded 5% dividend yield.
“All in, more good work from Sainsbury’s,” Shore Cap said in a note.
“[It’s] a stock that we believe offers considerable value at present levels noting what we believe are good fundamental economics for the UK grocers, including the perpetuation of manageable grocery inflation post the Budget.”
Shares climbed by 3.2% on Friday.
11.39am: Nasdaq seen lower as Wall Street set for drop
Wall Street appeared on course to backtrack on Thursday’s gains as Friday’s opening bell approached.
Futures had the Nasdaq down 0.5% ahead of trading, while the S&P 500 and Dow Jones were seen 0.4% and 0.3% lower respectively.
Each had ticked up on Thursday, aided by a lack of any drastic movement in Nvidia Corp (NASDAQ:NVDA) shares after earnings earlier in the week.
A quieter Friday was set to bring S&P flash purchasing managers index data and further clarity around the state of the US economy.
Readings for the Eurozone and the UK earlier in the day showed each falling into contraction territory this month, sending the dollar higher against both the euro and pound.
Among companies, Gap Inc (NYSE:GAP) (NYSE:GPS) shares were set for a surge after third-quarter figures sent the stock up over 15% in out-of-hours trading.
11.19am: Index higher despite declines for banks
The FTSE 100 was up 55 points at 8,204 on Friday morning, despite declines among banks following figures suggesting a downturn in the UK economy.
Barclays PLC (NYSE:BCS) (LSE:BARC), Standard Chartered PLC (LSE:LON:STAN), NatWest PLC, Lloyds Banking Group PLC (LSE:LON:LLOY) and NatWest Group PLC (LSE:LON:NWG) sat as the day’s biggest losers following the data from S&P Global.
This showed its flash PMI composite output index had dipped into contraction territory this month, as firm’s reeled from October’s Budget and the likes of higher input inflation.
B&M European Value Retail SA (LSE:BME) led risers in the meantime, despite news retail sales dropped sharply last month, alongside Vistry Group (LON:VTYV) PLC (LSE:VTY) and Endeavour Mining PLC (LON:EDV) (LSE:EDV, TSX:EDV, OTCQX:EDVMF).
11.10am: Lloyds set for further pressure in motor finance probe ‘waiting game’ - analysts
Lloyds Banking Group PLC (LSE:LLOY) shares risk further pressure until further clarity on the Financial Conduct Authority’s motor finance commission probe and redress comes to light.
Following a spate of updates surrounding the investigation this week, Jefferies analysts noted investors would “understandably” be drawn to stocks seen as less exposed.
“Clarity will only be achieved once the FCA announces the design of its redress scheme,” analysts said in a note, “which may be well into next year”.
“Understandably, this will continue to push investors away from Lloyds to easier stories like NatWest”... Read more
Lloyds shares fell 1.8% on Friday, having dropped 12.9% in the past month.
10.34am: Bank of England in tight spot as private sector contracts - analysts
Deutsche Bank (ETR:DBKGn) analysts have noted the Bank of England would be left in a tight spot after S&P Global figures on Thursday showed the UK private sector falling into contraction.
Highlighting the data as the first “real test” after last month's Budget, Detusche said policymakers would have to mull potential inflation on the back of higher taxes against weaker private sector demand.
“We expect the [Bank of England's] Monetary Policy Committee to be more cautious than ever, treading a fine line between removing policy restraint too quickly, or indeed, keeping policy too restrictive in the face of heightened uncertainty,” Deutsche said.
Coupled with news of a worse-than-expected drop in retail sales over October, XTB analyst Kathleen Brooks warned Friday had been a “bad day” for economic data.
“Sentiment indices are the lead indicator, and this does not bode well for the UK economy,” Brooks said.
Rate cut expectations rose in the wake of the data, with the market now pricing in a 14% chance of a reduction in interest next month, against 9% previously.
The pound shed 0.69% against the dollar to sit at US$1.2503 in the meantime, reflecting its lowest since May.
10.09am: UK private sector moves into contraction territory
Britain’s private sector has fallen into contraction territory this month, ending a year’s worth of sustained expansion as firms reel from the Budget.
S&P Global reported on Friday that its flash PMI composite output index had dipped to 49.9 in November, from October’s 51.8, with a sub 50-point reading reflecting contraction.
Businesses were “giving a clear ‘thumbs down’ to the policies announced in the Budget,” S&P economist Chris Williamson noted, including hiked employer national insurance.
“The first survey on the health of the economy after the Budget makes for gloomy reading,” he continued.
“Businesses have reported falling output for the first time in just over a year while employment has now been cut for two consecutive months.”
S&P’s manufacturing PMI fell further below the stagnation mark from 49.9 to 48.6, while the services index dropped to 50.0 from 52.0.
Declining business optimism had hit the figures, while concerns were also cited around stronger input inflation, S&P said.
The FTSE 100 was up 61 points after the update.
9.49am: Games Workshop tops FTSE risers
Games Workshop PLC topped risers on the FTSE All-Share on Friday morning after signalling trading had surpassed expectations over the first half of the year.
Shares surged 14.2% to 13,370p following the update, which said revenue over the first half of the year would exceed £260 million as pre-tax profit topped £120 million.
Licensing revenue was said to be on course to overshoot £30 million, against £13 million a year earlier.
“The beauty of licensing income is it comes with negligible extra cost for the company and therefore is highly profitable,” AJ Bell (LON:AJBA) analyst Russ Mould said.
He pointed to sales of the Space Marine 2 video game as likely boosting its licencing revenue, highlighting news of a potential tie-up with Amazon (NASDAQ:AMZN) for a Warhammer 40K film and TV series was also due soon.
“Being vertically integrated, Games Workshop controls everything from design to sales, allowing efficient cost optimisation and pricing control,” Mould said.
“It continues to be a unique business on the UK market and that has helped it attract a premium valuation.”
All of London’s indices were in the green on Friday morning, with the FTSE 100 up 35 points at 8,184.
9.34am: Boeing unveils $2.4bn US Air Force order
Boeing Co (NYSE:NYSE:BA, ETR:BCO) has unveiled a US$2.38 billion order for aerial refuelers from the US Air Force.
A contract to build a further 15 KC-46A Pegasus tankers was unveiled on Thursday, adding to the 89 delivered to the US Air Force since 2019, Boeing said in a statement.
The deal meant some 168 KC-46As were now under order globally, Boeing added.
“We appreciate our continued partnership with the US Air Force,” KC-46 programme manager Lynn Fox commented, “this is another big milestone for our team”.
9.08am: Thales (EPA:TCFP) shares drop on UK, French bribery probe
Thales shares took a knock on Friday morning after news the aviation and defence firm was under investigation over suspected bribery and corruption.
French and UK authorities unveiled the joint probe into Thales, which employs over 7,000 staff in the latter, on Thursday.
“Working collaboratively with our international partners is a crucial factor in the fight against international corruption,” UK Serious Fraud Office director Nick Ephgrave said.
Thales, which has its UK headquarters in Reading, built 650 lightweight multirole missiles which the UK in September said would be sent to Ukraine and also secured a £1.8 billion contract last February for Royal Navy ship and submarine maintenance.
“Thales confirms that the Serious Fraud Office and the Parquet National Financier have commenced an investigation in relation to four of its entities in France and the UK,” a spokesperson said.
Shares dropped 5% to €145 on Friday.
8.41am: Northvolt files for bankruptcy protection in US
Northvolt has filed for bankruptcy protection in the US in a bid by the electric vehicle battery maker to turn its fortunes around.
Northvolt said Thursday that a voluntary Chapter 11 filing had been made in a Texas bankruptcy court in a bid to reorganise the company’s financial obligations.
Operations would continue as normal, Northvolt added, including at its flagship gigafactory in Skellefteå, Sweden, before an anticipated exit from bankruptcy early next year.
Funding worth $145 million (£115 million) would become available as a result of the move, it said, while customer Scancia had committed to $100 million in new financing.
“This decisive step will allow Northvolt to continue its mission to establish a homegrown, European industrial base for battery production,” interim chairman Tom Johnstone commented.
“Despite near-term challenges, this action to strengthen our capital structure will allow us to capture the continued market demand for vehicle electrification.”
8.17am: Retail sales face sharp drop on Budget fears
Retail sales across the UK fell more than expected last month as concerns around the Budget and unseasonably warm weather struck.
According to the Office for National Statistics, sales across the sector slipped 0.7% month on month in October, against analysts’ anticipations for a 0.3% drop.
Clothing sales faced the sharpest drop, of 3.1%, while both food and non-food figures declined as automotive fuel increased.
“Retailers across a range of industries suggested that low consumer confidence and uncertainty around the Budget announcement affected sales,” The ONS said.
The drop followed a 0.1% increase in September and marked a 2.4% rise over the year to October.
8.00am: Games Workshop lays groundwork for expectation-beating figures
Games Workshop Group PLC (LSE:LON:GAW)'s trading over the first half of the year has overshot expectations, the game maker said on Friday.
Revenue is set to exceed £260 million in the six months to December, having sat at £235.6 million over the first half of 2023.
Licensing revenue is seen surging from last year’s £13 million to “not less than” £30 million this time around, the company added.
Pre-tax profit is on course to overshoot £120 million as a result, against the £96.1 million seen a year ago.
“The group is pleased to announce that trading since the last update on 18 September 2024 is ahead of expectations,” a statement said ahead of interim results on January 14.
7.40am: DFS signals improved trading as interim CFO appointed
DFS Furniture PLC (LON:DFSD) (LSE:DFS) has appointed ex-Imperial Brands senior Marie Wall as interim chief financial officer and signalled ongoing improved trading.
Improved trading seen through the final quarter of its last financial year has continued into the first 20 weeks of DFS’ current period, the furniture retailer said on Friday.
Order intake has kept growing, while further progress has been made on cutting costs, DFS added.
Wall, who previously served as the tobacco firm’s deputy chief financial officer, will replace John Fallon after he announced his departure in October, DFS also announced.
“Marie's experience and skills make her ideally suited to take on the role,” chairman Steve Johnson commented.
Wall has also held roles at Wolseley (LON:FERG) and Dixons Carphone (LON:CURY), DFS highlighted, and will join next month before Fallon leaves in January.
7.20am: Energy bills to be hiked once more in January
Energy bills will go up again in January as households grapple with the colder months, Ofgem confirmed on Friday.
The energy price cap, which determines bills, will climb by 1.2%, or £21, to £1,738 from January, after a 10% increase came into force last month.
This reflects what households would pay on an annual basis under the cap and determines unit costs of gas and electricity, which will both go up.
Electricity will rise to 24.86p per kilowatt hour, from 24.50p currently, while gas will go from 6.24p to 6.34p.
Daily standing charges, paid regardless of usage, will fall by 2p to 60.97p for electricity and 1p for gas to 31.65p.
7.11am: Stocks seen higher
Futures had the FTSE 100 ticking up 6 points to 8,206 on a quieter Friday, after a solid increase on Thursday.
Increasing oil prices on fears of escalations around the Russia-Ukraine war had helped fuel Thursday’s gain, as both BP (LON:BP) and Shell (LON:SHEL) rose.
Asian markets were mixed overnight, with Chinese markets facing hefty declines.
Back in the UK, attention on Friday was on news energy prices would rise once again in January, as Ofgem firmed up a £21 increase in its price cap to £1,738.
5.00am: What's to come
A quieter Friday brings retail sales figures, PMI data and a consumer confidence reading, while attention will also be on Unilever (LON:ULVR)'s investor day.
Consensus expectations are for a 0.3% drop in retail sales over the course of October, following a 0.3% uptick in September.
Unilever's investor day will be in focus on expectations the consumer goods giant could firm up plans to spin out its ice cream business... Read more
Announcements due:
Interims: Workspace Group (LON:WKP) PLC
AGMs: Caracal Gold PLC, DFS Furniture PLC (LSE:DFS), Europa Metals (LON:EUZ) Ltd, GreenX Metals Ltd (LON:GRXGR), Neometals Ltd, Quadrise (LON:QED) PLC, Sovereign Metals Ltd (LON:SVML), Synergia Energy Ltd
Economic announcements: Retail Sales (UK), Consumer Confidence (UK), Flash Composite PMI (UK), Flash Composite PMI (US), Gross Domestic Product (GER)