FTSE 100 Live May 20: Retail sales beat expectations, consumer confidence at rock bottom
Footlocker sales landline
US sports shoe retailer Footlocker, which has 59 stores in the UK, reported “strong” first-quarter results but struggled with “difficult comparisons between fiscal stimulus and historically low promotions in the UK.” ‘last year”.
Total sales for the sneaker and sportswear outlet increased by 1%. However, same-store sales were down 1.9%, reflecting footfall difficulties on the high street.
The company reported net profit of $133m (£107m), or $1.37 per share, for the 13 weeks to April 30, 2022, compared with net profit of $202m, or 1 $.93 per share, for the same period last year.
Record profits at Nationwide
The Nationwide Building Society today recorded its best results since it was founded in 1884 and insists it is in a strong position to help its members struggling with the cost of living.
A booming property market helped profits for the year more than double to £1.6bn. Outgoing CEO Joe Garner attributes the jump in part to a decision to return to 90% mortgages in June 2020 as Covid raged.
M&C Saatchi to sell at Next Fifteen
M&C Saatchi today landed a £310m takeover bid from rival Next Fifteen, escaping an unwanted competing bid from its own vice-chairman.
Vin Murria, the largest shareholder, has been suing the ad company for months.
But it’s been clear from the start that the rest of the board, including CEO Moray MacLennan, didn’t like his approaches.
Today’s deal with Next Fifteen was 247.2p, of which the cash element is £40m. That’s well above its 207p bid and nearly 50% above where the stock was yesterday. Shares jumped 58p to 223p, still below the bid, indicating some concern that Murria could still use his 12% stake to be disruptive.
Read the full story.
Rate Outlook Rebounds NatWest, FTSE 100 Rebounds
Storm clouds over the UK economy fail to dampen enthusiasm for bank stocks after NatWest secured another broker upgrade today.
Investec analyst Ian Gordon sees the state-backed lender as an attractive bet on higher interest rates, triggering a 10p rise in its price target to 245p per share. The low unemployment rate and the prospect of share buybacks add to his optimism.
The lender, led by Alison Rose, is also the top domestic banking choice for UBS. Its analyst Jason Napier expects loan losses to be better than expected, prompting a repricing once investor confidence around the economic outlook improves.
Shares in NatWest rose 3.7p to 212.8p as the wider London market ended another volatile week in the spotlight, with the FTSE 100 index up 122.23 points to 7424 .97. The improvement reverses nearly all of the losses seen yesterday, when recessionary nerves were fueled by weak updates from US retail giants Target and Walmart.
Today’s mood was helped by support for China’s Covid-hit economy after its central bank cut a key rate. Markets across the region benefited and Asia-focused insurer Prudential topped the London riser chart with a gain of 5% or 51.8p to 1029p.
China’s move also boosted confidence in the mining sector, with Glencore and Anglo American both gaining 2%. Royal Mail, whose valuation fell below £3bn yesterday after slipping 12% in the wake of annual results, improved 4% or 12.6p to 312.6p.
The FTSE 250 index climbed 1.5% or 310.50 points to 19,999.52, driven by rallies of 9% and 6% respectively for cybersecurity firm Darktrace and developer Countryside Partnerships. Luxury carmaker Aston Martin Lagonda rose 21.4p to 699.4p.
Retail sales volume up 1.4% in April
Today’s unexpected increase in retail sales for April means the UK economy may have a little more momentum than previously thought.
The widespread 1.4% month-over-month rise in volumes was the first improvement in three months and left sales down 0.1% from where they started this month. year.
Capital Economics believes that the low unemployment rate and the savings accumulated during the pandemic can offer some protection in times of economic uncertainty.
Its economist Nicholas Farr added: “The signs of resilience in retail sales data are encouraging and there are several reasons to believe that weak confidence will not weigh on spending as much as in the past.”
The consultancy continues to believe that the Bank of England will have to raise rates more than expected, to 3% next year.
FTSE 100 and miners rally, Royal Mail up 5%
The FTSE 100 index is up 1.35% or 95.70 points to 7398.44, meaning the elite have recovered all but 40 points from yesterday’s losses.
The improvement caps another volatile week for global markets after updates from U.S. retailers Target and Walmart stoked recession fears and traders continued to price in the need for much higher interest rates.
Miners including Anglo American and Glencore rose 2% after China’s central bank cut a key rate today, while Royal Mail rebounded 5% after its 12% plunge following annual results of Thursday.
The FTSE 250 index climbed 1% or 210.23 points to 19,899.25, led by a 5% rally for cybersecurity firm Darktrace and a 3% gain for publisher Future.
THG shares up 24% after bid interest
Shares of Hut Group Business THG rose 24% to 144p after two potential bidders were revealed last night, including property billionaire and former Chelsea bidder Nick Candy.
The other approach comes from a consortium led by Belerion Capital Group, but its proposal valuing the e-commerce company at 170p per share, or just over £2bn, has already been rejected by the board of administration of THG.
Founder and Managing Director Matt Molding launched THG in 2020 and the shares spent their first year trading steadily above 600p. They were at 80p in early March and 116p before last night’s announcements.
Liberum analysts believe the shares are heavily undervalued, based on a 700p price target.
They said today: ‘A bidder could take the business private and consider relisting it later in the US, where these tech companies receive much greater appreciation from investors.
“THG’s three core businesses – Beauty, Nutrition and Ingenuity – combined are expected to generate over £2 billion in sales in 2022 and, if separated, would be highly valued strategic assets in their own right which should underpin valuation. “
Consumer confidence at rock bottom – GfK
GfK’s consumer confidence score of minus 40 is a record low for the monthly barometer, weaker than on the darkest days of the global banking crisis, the impact of Brexit on the economy or the shutdown of Covid.
Consumer pessimism is most evident in the depressed general economy sub-measures, which are minus 63 for the past year and minus 56 for the year ahead. GfK’s Major Buys Index has also declined in each of the past six months and currently sits at minus 35.
The readings, which are being driven by inflation to a 40-year high amid soaring food and fuel bills, come despite a 50-year low for UK unemployment with job vacancies higher than first-time job seekers.
GfK Chief Client Strategy Officer Joe Staton said: “The outlook for consumer confidence is bleak and nothing on the economic horizon shows reason for optimism anytime soon.”
FTSE 100 higher, S&P 500 near bear market
Traders are expecting a positive session in Europe after Asian markets rallied on fresh support for China’s Covid-hit economy.
The country’s central bank lowered its benchmark mortgage rate for the second time this year, a move that was followed by gains of more than 1% for stock markets across the region.
CMC Markets expects the FTSE 100 to open 78 points higher at 7380, pushing back some of the 135 point loss seen on Thursday after weak updates from retailers including Target and Walmart fueled the global recession fears.
US futures markets are also pointing to a positive start, meaning the S&P 500 could avoid bear market territory after falling 0.6% yesterday on the verge of a 20% decline from its all-time high. of January.
Barring a major improvement today, the S&P 500 will drop for the seventh straight week for the first time since 2001.
Brent crude oil prices, meanwhile, were little changed over the week at just under $112 a barrel and Bitcoin remains near the $30,000 mark after steep falls in cryptocurrency markets. last week.