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FTSE 100 makes a subdued start and car production rises in November

Published 23/12/2022, 08:30
© Reuters.  FTSE 100 makes a subdued start and car production rises in November
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Proactive Investors -

  • FTSE 100 little changed, up 3 points
  • Car production rises 5.7% in November
  • Inchcape to complete £1.3bn deal by end of 2022

8.30am: UK car production grows again in November

UK car production grew for the second consecutive month in November, up 5.7% to 80,091 units, according to the latest figures published today by the Society of Motor Manufacturers and Traders (SMMT).

Mike Hawes, SMMT chief executive, said: “These figures bring some Christmas cheer to UK car makers in what has been another incredibly tough year.”

The rise means UK car manufacturing output has grown in six of the past seven months demonstrating how, even amid global chip shortages and supply chain constraints, factories are doing their best to meet demand for new cars at home and overseas.

Despite the overall rise in output, November’s performance was still down against historic levels, -44.1% off the pre-pandemic five-year average for the month and -25.7% off 2019’s total of 107,744 units.

This reflected the impact of Covid lockdowns overseas, recently in China, structural and product changes, the long-running squeeze on semiconductor supply and wider turmoil resulting from war in Ukraine.

8.15am: Bah Humbag

FTSE 100 was in a “bah humbag” mood as it made a subdued start to a shortened trading session as another wave of industrial action disrupted the UK.

At 8.15am London’s lead index was down 1 point at 7,468 while the FTSE 250 slipped 7 points 18,755.

Planes, trains, driving lessons and postal deliveries are set to be disrupted by walkouts as employees at the National Highways, Driver and Vehicle Standards Agency (DVSA) and Royal Mail (LON:IDSI) take industrial action today.

As they continue their strike into Saturday, they will be joined by rail workers represented by the RMT, Abellio London bus workers, and Environment Agency employees, who will launch separate waves of action.

Back in the markets and on a quiet day of corporate news Inchcape PLC slipped 1% despite the positive update that its £1.3bn acquisition of Derco should be completed by the end of the year.

Peel Hunt said the news was “a positive, if largely expected, development.”

“As previously flagged and in line with guidance, we expect to increase FY23E EPS by 16% and FY24E EPS by 21%” the broker said.

UK renewables income fund Bluefield Solar Income Fund Limited rose slightly after buying a 46.4 MWp UK portfolio of two large ground mounted solar assets for £28.7mln from Fengate Asset Management plus assumed debt of £27.3mln.

The acquisition will be funded through existing facilities and take the company's total outstanding debt to £537mln and the total installed capacity of its portfolio has grown to 813 MWp.

John Scott, Chairman of Bluefield Solar, said: “the acquisition underpins the board's confidence in delivering our FY 2022/23 target dividend of not less than 8.40pps."

7.40am: Green light for Inchcape's Derco deal

Little in the way of corporate news so time for dealers to go through their Christmas TV guides and munch a mince pie.

Auto distributor Inchcape PLC (LON:INCH) said it expects to complete the acquisition of Derco by the end of the year after Peruvian authorities cleared the deal.

The £1.3bn takeover of the largest independent automotive distributor in Latin America was announced in July.

The green-light follows approval from Inchcape's shareholders last week. Derco runs sites in Chile, Peru, Colombia and Bolivia.

7.00am: FTSE 100 seen higher in shortened session

FTSE 100 is expected to open higher as US markets closed off their worst levels although volumes are expected to be thin on what is a short trading day in London ahead of the festive break.

Spread betting companies are calling the lead index up by around 18 points.

Wall Street’s three leading indices closed down sharply on Thursday, but higher than intra-day lows, conceding Wednesday’s gains as stronger than expected GDP figures renewed concerns about rising interest rates while poor results from Micron (NASDAQ:MU) Corp. knocked sentiment amongst tech stocks.

At the close the Dow was 348 points lower, or 1.04%, to 33,028, the S&P 500 was down 56 points, or 1.44%, at 3,823 and the Nasdaq Composite declined 233 points, or 2.18%, to 10,476.0

Fawad Razaqzada, market analyst at City Index and FOREX.com said: ““Yesterday’s gains, gone. Sentiment, bearish. Once again, the market showed no upside follow-through. It is trapping the bulls. It appears as though Santa Rally is not happening this year.”

“The economic outlook is not going to change overnight, which means much of the issues we are facing right now could well be with us well into 2023.“

In Asia on Friday, the Japanese Nikkei 225 index closed down 1.0% while in China and Hong Kong markets are also lower.

Read more on Proactive Investors UK

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