FTSE 100 stalls
The FTSE 100 is trading broadly flat this morning after booking three consecutive day of gains.
That follows a muted session in Asia and comes after central bankers from around the world continued to stress that more interest rate hikes are needed during the ECB Forum in Portugal yesterday as inflation remains well ahead of desired levels.
European Central Bank president Christine Lagarde all but cemented the view that we will see another rate hike in July while Fed chair Jerome Powell pushed back against market expectations by leaving the chance of consecutive rate rises on the table. Bank of England governor Andrew Bailey said markets continue to underestimate how long monetary policy will need to tighten.
The UK economic calendar is headlined by mortgage approvals and BoE consumer credit this morning. Across the Channel, we have Eurozone economic sentiment, Spanish business confidence and German inflation due out. This afternoon, over in the US, we have GDP figures, initial jobless claims and pending home sales data scheduled.
FTSE 100 analysis: Where next for the UK 100?
The UK 100, which tracks the performance of the FTSE 100, has been regaining the heavy ground lost last week when it tested June-lows but is struggling to keep things going today.
We are looking for the index to keep climbing toward the falling trendline if it can keep up the momentum. A break above the trendline, which can be traced back to April, could pave the way fo the index to climb toward 7,650.
We can see 7,454 held as a firm floor on Friday and Monday, in-line with the lows we saw at the end of May. Any break below here would risk the index falling back toward the 2023-lows we saw back in March.
Top UK stock news
Serco is up more than 5% this morning after raising its full year guidance following a strong performance in the first half. It raised its annual sales goal by 4% to £4.8 billion and its underlying trading profit target by the same amount to £245 million. If achieved, Serco is on course to deliver a 6% year-on-year rise in sales and a 8% jump in profits. That came as Serco said revenue rose 13% in the first half, with organic growth of 6%, while underlying trading profit was up around 8% at £140 million. Serco said governments around the world are looking for help with complex services like immigration and defence, which is driving demand.
B&M European Retail Value is down 1.2% in early trade despite revealing all three of its store brands delivered ‘strong, profitable trading momentum’ in the 13 weeks to June 24, with overall revenue rising 13.5% from the year before at £1.32 billion – coming in ahead of the £1.28 billion forecast. B&M’s UK stores reported like-for-like growth of 9.2%, driven by strong demand for both groceries and general merchandise. ‘The business is well positioned as we start to transition to our autumn winter season,’ said CEO Alex Russo.
Morgan Sindall Group is up over 6% after it said it now expects annual profit to be ahead of expectations thanks to a stellar performance from its Fit Out division that designs and installs interiors for buildings. It said the Fit Out unit saw profit rise around 40% in the first half which, alongside its strong order book, has given it the confidence to raise its full year outlook. Interim results will be released on August 3.
3i Group is up 0.5% in early trade. The company said Action, its Dutch discount store operating across Europe, saw like-for-like sales grow 22% in the first 25 weeks of 2023 and that it remains on track to open 84 net new stores, up from the 75 it opened during the same period last year. It said offering the lowest price remains its ‘top priority’ as it tries to attract footfall and said it is on track to deliver ‘another good quarter of profit growth’. The rest of 3i’s private equity portfolio ‘continues to demonstrate resilience’ but it admitted a small portion is suffering from lower customer demand.
Morgan Advanced Materials is up 0.4% after organic sales growth came in at about 2% in the first six months of 2023. That followed a recovery in the second quarter, when sales rose around 9%, after trading was disrupted by a cyber incident in the first quarter. It reiterated its ambition to grow revenue by 2% to 4% over the full year.
Marlowe, which provides mission-critical services and software, is up 2.4% after revenue rose 47% during the year to the end of March to £465.7 million, with adjusted Ebitda jumping 52% to £82.7 million. The impressive growth means Marlowe is growing faster than it anticipated. ‘We have now surpassed our target of generating £500 million run-rate revenue by the end of FY24 and continue to expect to exceed our £100 million run-rate adjusted Ebitda target organically by the same date,’ Marlowe said. However, Marlowe remained in the red at the bottom-line with a pretax loss of £6.9 million, reflecting a rise in non-cash amortisation and provisions.
Online card company Moonpig is up 4.5% after it said revenue rose 5.2% in the year to the end of April to £320.1 million while adjusted Ebitda climbed 12.4% to £84.2 million. Adjusted pretax profit was down 6.9% at £48 million, although that was still ahead of the £45.5 million forecast. It said the core Moonpig brand has returned to growth since March and that that all other brands should follow in the second half of the new financial year, when it is aiming to grow revenue by a mid-to-high single digit percentage while maintaining adjusted Ebitda margins.
Water utilities Severn Trent, United Utilities and Pennon Group remain in play after the Telegraph said Whitehall is drawing up contingency plans to nationalise swathes of the water industry as Thames Water, the largest individual supplier, teeters on the brink of collapse as it struggles to manage its £14 billion debt pile.
Assura is down 0.4% after it announced it has completed its 100th development as it marks two decades of developing healthcare properties across the UK. That comes as the £6 million Prestbury Medical Centre in Wolverhampton is finished, paving the way for it to serve over 14,500 patients.
Ashtead Group has been downgraded to Neutral by BNP Exane, which has a target price of 5,550p on the equipment rental giant. The stock is down 2.1% at 5,358p this morning.
Broker Goodbody upgraded three UK-listed stocks to Buy this morning, lifting its view on soft drinks maker AG Barr as well as pub chains Mitchells & Butlers and Marston’s. AG Barr is down 0.1% today, Mitchells & Butlers is up 0.4% while Marston’s is down 1.1%.
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