Proactive Investors -
- FTSE 100 down 94 points at 8,072
- US recession likely, says JP Morgan
- Wage growth slows in July
Pagegroup turns to job cuts amid sector slowdown
Choppy waters for the recruitment industry could be ahead after FTSE 250 firm Pagegroup's shares dipped 2% on the back of collapsing profits.
Profit before tax dropped by more than 56% on a year-on-year basis, as stalled hiring trends caused negative growth across all regions, with the UK the worst performer.
“Permanent recruitment continues to be impacted more than temporary, as clients seek more flexible options and permanent candidates remain reluctant to move jobs,” chief executive Nicholas Kirk explained.
To deal with the downturn, Pagegroup has launched stringent cost-saving measures, including shedding 3.6% (or 283 roles) from its workforce in the period.
Helios Towers weighs on FTSE 250
The FTSE 100 has appeared to have found its floor today at around 8,085, nearly 80 points lower than yesterday's close, but still 162 points above the lows experienced on Monday.
In mid-caps, the FTSE 250 has fallen by around 255 points (1.2%), and while TI Fluid Systems enjoys a 10% pop on the back of strong earnings, quite a few of its constituents are in the red.
The index's biggest faller of the day is Helios Tower, the telecommunications company, as its lower first-half profits were too significant to be offset by hiked guidance.
Operating profit of US$132.3 million for the first half of the year was up 91% from a year ago but the second quarter was down 3% from the first three months of the year.
Helios is now expecting adjusted EBITDA of US$410-$420 million, up from US$405-420 million before.
Shares in the group are down 5% today at 116p.
Persimmon feels benefit of Labour's housing push
Labour said it would push for more homes during its term in government, a choice which has resulted in a boost for the housing industry, lifting stocks like FTSE 100 housebuilder Persimmon.
The York-based building company saw its shares tick 2.7% higher after it said forecasts for its home completions in the full year would be at the top end of guidance, around 10,500.
Its current private forward order book is up around 28% at £1.12 billion.
On planning, Persimmon (LON:PSN) said it achieved detailed approval on roughly 6,000 plots so far this year, and that “encouragingly, circa 1,000 of these were achieved in July following the new government taking office”.
The company invested £195 million on land purchases in the first half, with a landbank now at 81,545 owned plots, of which 38,067 are owned with detailed planning.
Gold rush as markets slump
Fears that the US may plunge into a recession within the next year has caused chaos to global markets, a day after some of the world's largest economies staged a recovery.
With nearly every main index in Europe down around 1%, including the FTSE 100, down 1.1%, it's little surprise investors have begun pumping funds into one of the world's most reliable assets.
Following the market's chaotic performance on Monday, the trading of gold has soared, with the Royal Mint revealing the buying and selling of the precious metal trebled at the start of the week.
When compared with this year's daily average for the number of investors making trades, the Royal Mint saw a 53% rise, with buying outpacing selling by 5:1.
Despite the growing demand for gold, its price has dropped around 2.5%, but remains up 0.5% in the last month.
It wasn't just investors rushing to buy gold this week, however.
The Royal Mint’s Stuart O’Reilly said: "On one side, traders were forced to reduce their holdings in gold and silver following recent market highs so that they could cover losses in global equity markets.
"At the same time, as precious metals prices dropped after this sell-off, UK retail investors viewed this as an opportunity to lock in lower prices while increasing their allocations to gold and silver.
"From our experience, gold and precious metals investing grow in popularity during more challenging times for the global economy as investors look to diversify their portfolios and hedge against inflation."
Estate agent optimism highest since pandemic
Estate agents have said they are feeling more optimistic about the housing market than they ever have since the start of the pandemic, a new survey revealed on Thursday.
Most of the estate agents polled said they expect to sell more homes over the next quarter than currently, with a net 30% saying that revenues would rise between now and the end of autumn.
It marks an increase from the 22% that had a positive outlook back in July and is the most optimistic the industry has been since January 2020, the Royal Institute of Chartered Surveyors revealed in its survey.
“The new government’s focus on boosting housing development, alongside the recent quarter-point base rate cut, does appear to have shifted the mood music in the sales market," said Simon Rubinsohn, chief economist at the RICS.
Yesterday, Barclays (LON:BARC) cut the rates on several of its main mortgage products, including some below 4%, joining rivals like HSBC (LON:HSBA).
Deliveroo achieves first profit
Outside of the FTSE 350, food delivery service Deliveroo (LON:ROO) has announced its first-ever profit in a half year, leading the way for it to launch a £150 million buyback.
A £1.3 million profit was recorded for the six months to June, against an £82.9 million loss a year earlier.
Positive free cash flow of £3.2 million was also recorded, following a £27.7 million deficit in the first half of 2023.
Chief executive Will Shu noted the return to profit and positive cash flow marked “two major financial milestones,” coming in part on a “stabilising” consumer environment.
Deliveroo added grocery sales had grown to take a larger share of its gross transactions, with a new premium subscription tier also rolled out in the UK alongside more brand partnerships.
FTSE 250 falls but TI Fluid Sytems outperforms
In the world of mid-caps, and offering a better picture of the UK economy, the FTSE 250 has dropped more than 1.3% as it feels the weight of the growing global concerns.
One company attempting to push the index higher is TI Fluid Systems after it jumped 12% on the back of a profit beat in the first half and plans to expand its margins over the near term.
In the run-up the results the shares had recently fallen to a 17-month low.
Adjusted earnings before interest and tax of €135.5 million was reported for the first six months of 2024, up 2.7% from a year ago and exceeding the City consensus estimate of €131 million.
On the outlook, the FTSE 250-listed group said the productivity and efficiency measures implemented at the turn of the year "reaffirm our confidence in expanding our adjusted EBIT margin".
"As a result, we are increasing our full year adjusted EBIT margin expectation to above 7.6% notwithstanding a slight decline in revenue at constant currency due to the recent softening of the 2024 industry outlook."
Entain rises on Euros boost
Another company on the climb this morning is Ladbrokes and Coral owner Entain (LON:ENT), up 9.5%, with eagle-eyed investors yesterday likely to have noticed positive results were on their way after its shares climbed 4%.
What seemed to impress the market today was hiked full-year guidance due to better-than-expected second-quarter performance, with England's Euros campaign having provided a boost.
Stronger than expected win margins from the football tournament, likely buoyed by England's loss in the final, allowed first-half earnings to rise 5% year-on-year to £524 million.
It means full-year earnings are now expected to reach £1.09 billion, and has allowed management to confirm an interim dividend of 9.3p a share, up 5% from 2023.
Interim cheif executive Stella David said: "Entain's H1 results are clear evidence that our hard work improving the group's operational performance is bearing fruit.
“Whilst there is more work to do, we are pleased with the progress so far and look forward to building further on these solid foundations in H2 and beyond.”