Proactive Investors -
- FTSE 100 down 97 points at 7,359
- UK economy flatlines in third quarter
- Diageo (LON:DGE) hit by weak LatAm & Caribbean sales
Subdued start expected on Wall Street
Across to the US now, and stocks are expected to open modestly lower after comments by Federal Reserve chair Jerome Powell sparked heavy falls in equities on Thursday.
In pre-market trading, futures for the Dow Jones Industrial Average were flat, while those for the S&P 500 were 0.1% lower, and contracts for the Nasdaq 100 futures were down 0.3%.
The US Federal Reserve is prepared, if needed, to hike interest rates further in order to bring inflation down to its long-term two percent target, Fed Chair Jerome Powell said.
"We know that ongoing progress toward our two percent goal is not assured: Inflation has given us a few head fakes," Powell told a conference in Washington. "If it becomes appropriate to tighten policy further, we will not hesitate to do so," he added.
Joshua Mahoney at Scope Markets noted Powell’s comments helped bring the equity market resurgence to a “grinding halt,” with his apparent hawkish tone pertinent ahead of US inflation figures next Tuesday.
In economic news, the University of Michigan will release the preliminary reading of its consumer sentiment index for November, which economists expect will be essentially unchanged at a level of 63.7, compared with 63.8 in October.
Burberry dragged lower by Richemont update
Burberry Group PLC (LON:BRBY) is down 3.7% with the luxury goods sector under pressure after disappointing results from Richemont (LON:0QMU) today.
Shares in the Swiss firm, which owns Cartier and Montblanc, fell 6.9%, after it reported a surprise fall in operating profit in a release today.
Sales grew 6% led by a 14% jump in Asia Pacific.
"Growth eased in the second quarter as inflationary pressure, slowing economic growth and geopolitical tensions began to affect customer sentiment, compounded by strong comparatives," the company said in a statement.
But more positively, the firm said "a soft-landing scenario seems to be prevailing in major economies with still higher growth expected from China, which should benefit from stimulus measures."
The statement follows Gucci-owner Kering (LON:0IIH) and French giant LVMH (EPA:LVMH) both who reported weakening demand recently.
In Europe, LVMH has fallen 3.9% and Kering is down 4.7%.
Relx's insurance seminar impressive and reassuring
The FTSE 100 remains down sharply and it would be worse but for a rise in tthe oil price which has propped up BP (LON:BP) and Shell (LON:RDSa).
One ofher stock just about holding in positive territory, is Relx PLC, following an investor seminar on Thursday on its Risk division.
Analysts at Berenberg said the seminar focused on Insurance.
Risk is Relx’s largest division, accounting for 35% of the company’s revenue and 40% of its operating profit, Berenberg explained.
Within the division, insurance accounts for c40% of revenue, of a similar size to Business Services, while the balance of the division’s revenue is from government and specialised industry data services.
Berenberg said it found the presentation "very impressive and reassuring."
It noted the firm is still confident of high-single-digit growth for the next decade with Mark Kelsey, CEO of the Risk division, saying that he believes the Risk division can “sustain strong underlying revenue growth in the high-single-digits for a long time to come, another decade or more”.
This reflected a healthy blend of growth between old and new products with scope for incremental margin improvement over time.
Going forward, Kelsey said “there is nothing we need at the moment that we are looking at that we need to acquire”.
However, he did not rule out further acquisitions, adding that he would consider anything that might accelerate the Risk division’s growth.
Warpaint London rises amid a gloomy day for markets
One share heading higher is Warpaint London PLC, which expects annual results to be ahead of market expectations after continued strong trading in the second half of the year.
Shares in the specialist supplier of colour cosmetics and owner of the W7 and Technic brands rose 5.8% after it said trading was strong, with significant growth in all geographic areas.
Group sales for the year ending December 2023 are now expected to be at least £85 million, up from £64.1 million a year ago, with the key pre-Christmas sales period still ongoing.
Gross product margin remains robust and continues to be at a level in excess of that achieved in 2022, the company said.
Pre-tax profit for the year is now expected to be in excess of £16 million, more than double last year’s £7.7 million.
House broker Shore Capital said the unscheduled trading update "once again makes for very pleasant and welcome reading."
"Current trading has been above management and market expectations, and the growing list of new retail customers and store expansion with existing customers bodes very well for the medium to long term," the broker believes.
Shore has raised its 2023 EPS forecast by around 11% to 16.0p, implying more than 40% annual growth.
"We view Warpaint as being increasingly well set for sustained medium to long-term growth, with the quality of the growth building and driving significant cash generation as well, we see much to like," it added.