Proactive Investors -
- FTSE 100 makes a bright start
- CBI survey points to fall in business confidence
- Mulberry tumbles after posting half-year loss
9.00am: Betting companies enjoy boost from JP Morgan
Betting companies, Entain PLC (LON:ENT) and Flutter Entertainment PLC (LON:FLTRF), were near the top of the FTSE 100 risers as JP Morgan raised price targets for both.
“We continue to favour growth, scale and diversification within the industry” it said.
The broker gave three reasons to remain positive on the two companies: 1) comparisons are easing from quarter four onwards, further enhanced by the World Cup, 2) US profitability is imminent and 3) appealing valuations.
JPM upped its price target for Entain to 2270p from 2,050p and for Flutter to 16,000p from 14,800p whilst keeping an overweight rating on both.
8.35am: Ofgem proposes new price controls for local electricity networks
Ofgem has confirmed a five-year investment package for the electricity distribution network companies to help deliver "cheaper, cleaner, more reliable local grids."
As a result the operators of Britain’s local energy networks will be forced to spend more of their profits on investing to future-proof the country’s electricity grid as the industry regulator said it would not allow any rises in customer bills.
In a new set of price controls which will run from 2023 to 2028, Ofgem said that it would keep costs to consumers at around £100 per year.
The companies impacted include Scottish and Southern Electricity Networks, Northern Powergrid, SP Energy Networks, Electricity North West, National Grid (LON:NG) and UK Power Networks.
Shares in SSE PLC (LON:SSE) and National Grid were both around 1% higher after news.
SSE said the final determination allows SSEN Distribution £3.59bn of baseline total expenditure for the five-year period against an initial business plan ask of £4bn.
It said: “SSEN will now carefully examine the full details of Ofgem's Final Determination to gauge the extent to which it correctly represents a fair and balanced outcome for customers and investors.”
8.15am: FTSE 100 pushes higher
The FTSE 100 opened higher on Wednesday, despite further bad news from China, record food price inflation in the UK and two surveys pointing to falling business confidence.
At 8.15am the lead index was up 38 points at 7,512 and the more domestically focused FTSE 250 rose 79 points to 19,265.
China's factory activity shrank for a second straight month in November, official data showed, with the purchasing managers' index hitting 48.0 points, down from October's 49.2 according to data from the National Bureau of Statistics.
Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown (LON:HRGV) said: “It’s clear that a change to the zero-Covid policy can’t come soon enough to propel a recovery, and investors are clinging onto hopes that renewed attention of a vaccination programme for older citizens will hasten a relaxation of the rules.”
Back in London and food price inflation hit a fresh record high whilst surveys of British business by the CBI and Lloyds Banking Group (LON:LLOY) pointed to deteriorating business confidence.
Otherwise, investors will be eyeing EU CPI numbers and a speech by Federal Reserve, Jerome Powell, later today for further evidence as to where interest rates are likely to be heading on either side of the pond.
Stocks on the move included luxury handbag maker Mulberry Group PLC which plunged 22% as it swung to a half-year loss and revealed sales tumbled by 10% across the UK as the economic uncertainty and cost-of-living crisis knocked shopper confidence.
The group reported a pre-tax loss of £3.8mln for the six months to October 1 against profits of £10.2mln a year ago.
Rolls-Royce (LON:RR) PLC was higher as Barclays (LON:BARC) published a bullish update with an outperform rating and 110p price target.
7.50am: Food price inflation hits new record
Food inflation hit a new record in November with prices soaring 12.4% over the last 12 months according to the latest data from the British Retail Consortium (BRC).
No let up was in sight either with the BRC warning that Christmas will be pricier this year as well:
Helen Dickinson OBE, CEO of the BRC “Winter looks increasingly bleak as pressures on prices continue unabated.”
“Food prices have continued to soar, especially for meat, eggs and dairy, which have been hit by rocketing energy costs, and rising costs of animal feed and transport.”
“Coffee prices also shot up on last month as high input costs filtered through to price tags. Christmas gifting is also set to become more expensive than in previous years, with sports and recreation equipment seeing particularly high increases.”
The BRC-Nielsen IQ Shop Price Index showed that overall shop prices are now 7.4% higher than last November, up from 6.6% in October, setting another record high.
The data noted fresh food inflation rose even higher to 14.3%, up from 13.3% last month, driven particularly by the cost of meat, eggs and dairy.
7.00am: FTSE 100 set to make a bright start
FTSE 100 expected to make a bright start on Wednesday as investors look ahead to CPI figures from the EU and a speech by Federal Reserve chair, Jerome Powell later today.
Spread betting companies are calling the lead index up by around 30 points.
Michael Hewson chief market analyst at CMC Markets UK said the main focus today “is set to be on today’s flash CPI from the EU, which could set the scene as to whether we get 50bps or 75bps when the ECB meets in just over two weeks’ time.“
US markets closed in mixed fashion with investors preferring to remain sidelined ahead of Powell’s speech. He is due to speak at a Brookings Institution event on Wednesday about the outlook for the US economy and the labour market
At the close the Dow Jones Industrial Average was 3 points higher at 33,850, the S&P 500 slipped 6 points, or 0.16%, to 3,958 and the Nasdaq Composite fell 66 points, or 0.59%, to 10,984.
In Asia, stocks were mixed. Tokyo's Nikkei 225 index was down 0.2%. In China, the Shanghai Composite was down 0.4%, while the Hang Seng index in Hong Kong was up 0.3%. The S&P/ASX 200 in Sydney was up 0.4%.
Back in London and there are half-year results from water utility Pennon, luxury fashion company Mulberry and consumer gift packaging and stationery firm IG Design Group in the corporate diary.