FTSE 100 Analysis: Index tests 8-week lows

Close-up of market chart showing downtrend
Josh Warner
By :  ,  Former Market Analyst

FTSE 100 Analysis

The UK 100, which tracks the FTSE 100, is down 0.7% this morning and at 8-week lows.

The index is currently testing the intraday lows we saw yesterday of 7,589.8. A break below here could see it slip toward the supportive trendline that can be traced back to late last year, in-line with the ceiling we saw last August.

A rebound above 7,621 would allow it to recapture the level of resistance that has been in play since the start of 2022.

The UK 100 remains under pressure


Top UK stock news

HSBC is down 0.2% on news it is considering exiting as many as a dozen countries to focus on its expansion in Asia, according to Reuters. Chief financial officer Georges Elhedery told Reuters in an interview that operations in a number of countries are under review. ‘Some of these will have slower progress than others, and none of them is material enough on its own to change the profile of the overall business, but as we progress through and execute on these assessments, we do expect them to contribute towards that shift to Asia,’ the CFO said. The reviews follow pressure from Chinese shareholder Ping An Insurance.

The London Stock Exchange Group is flat after announcing chief financial officer Anna Manz will step down after she has served her 12-month notice period in order to pursue an opportunity outside of financial services. A search for her replacement is underway.

Mining behemoth Glencore is on the radar ahead of its annual general meeting on Friday, with the stock down 0.3% this morning. The company is expected to face pressure from a group of investors over its coal operations. Coal is making Glencore attractive sums but some investors, including L&G Investment Management, Allianz, Man Group and HSBC Asset Management, believe they are incompatible with its climate goals.

Bottling firm Coca-Cola HBC is down 4.2% and on course to lose ground for a seventh consecutive session ahead of its investor event in Italy today, when management will provide an update on its growth strategy and financial targets. It said it will unveil a new medium-term organic revenue growth target of 6% to 7% per year, up from the previous target of 5% to 6%. It said it remains comfortable with its guidance for 2023. ‘Our announcement today builds on the successful ongoing implementation of our strategy, and the strong performance we have achieved over the four years since our last investor day,’ said CEO Zoran Bogdanovic.

Water supplier United Utilities is down 0.4% and at its lowest level since early March after reporting annual results for the year to the end of March, reporting a 2.1% drop in revenue to £1.82 billion and a 42% plunge in pretax profit to £256.3 million because of inflationary pressures on energy and chemical costs. It will pay a total dividend of 45.51p for the year, up 4.6%.

Ingredient maker Tate & Lyle is up 2% after it posted double-digit growth in sales and earnings in the year to the end of March and vowed to deliver another year of progress over the next 12 months. Revenue rose 27% to £1.75 billion and adjusted pretax profit climbed 13% to £253 million. It raised its dividend by 2.5% to 13.1p, making a total payout of 18.5p for the year. It said it is aiming to grow its topline by 4% to 6% and increase adjusted Ebitda by 7% to 9% in the new financial year.

Pets at Home is down 4.3% after revealing underlying pretax profit rose 4.8% to £136.4 million in the year to the end of March, ahead of its guidance. That came as revenue rose 6.6% to hit an all-time record of £1.4 billion, with like-for-likes up 7.9%. Pets at Home gained market share and continued to grow its VIP base to loyal customers. Its total dividend for the year was up 8.5% at 12.8p. The pet supplier upgraded its medium-term goals and is now targeting annual sales by 7% each year. It is aiming for pretax profit CAGR growth of 10% over the medium term and upped its free cashflow conversion goal.

Hill & Smith, which makes products for key infrastructure projects, is up 2.2% after it said it expects annual operating profit to be ‘modestly ahead’ of the £110.2 million pencilled-in by analysts this year after delivering a record trading performance in the first four months of 2023. That would be up from the £97.1 million reported in the last financial year. Revenue was up 18% at constant currency in the initial stages of this year and profits grew despite strong comparatives from the year before. It also announced that Alan Giddins has formally taken up the role of executive chair for the next 12 to 18 months to provide some stability as a search for a new chief executive continues.

QinetiQ is up 1% after upgrading its long-term guidance and said it is now expecting its revenue and profits to double over the next four years. That came as defence firm reported a 41% jump in orders in the year to the end of March to a record £1.7 billion, taking its backlog to £3.1 billion. Revenue was up 20% at £1.58 billion and profit after tax jumped to £154.4 million from just £90.0 million the year before. Its outlook for the new financial year was unchanged.

Waste-to-product firm Renewi is down 4.7% after it said revenue and earnings remained broadly flat in the year to the end of March as it coped with lower prices and volumes as well as inflationary pressures. Revenue rose 1% to EUR1.89 billion and underlying Ebit – its key measure – dipped 1% to EUR132.9 million. Profit after tax at the bottom-line did suffer and fell to EUR66.6 million from EUR75.4 million. Renewi said it will meet expectations in the new financial year and that conditions for recycled metal, paper and plastics should be ‘more stable around current levels’. It also vowed to reinstate its dividend this year.

Flexible working space provider Workspace is down 0.7% after the firm upped its annual dividend by 20% to 25.8p after reporting strong double-digit growth in revenue and trading profit, but said it sank into the red at the bottom-line thanks to a slump in property valuations. Net rental income jumped 34% to £116.6 million and trading profit after interest was up 29% at £60.7 million. However, its loss before tax came in at £37.5 million after the value of its properties fell 3.2%.

Darktrace is up 2.8% at 295.6p and has appointed Chris Kozup as its chief marketing officer from June 6. He is joining from US cybersecurity firm Zscaler, where he held the same role. That comes hot on the heels of the appointment of Denise Walter as Darktrace’s chief revenue officer.

Bytes Technology has been named the UK cybersecurity stock with the highest quality and lowest risk on offer by Liberum by offering exposure to major firms like Microsoft, maintaining its Buy rating and raising its target price to 580p from 550p. It said Darktrace is a higher risk play but said it is still a Buy with a 400p price target. It described NCC as a turnaround story with a lowly valuation and also said it is a Buy with a 150p price target.

Dechra Pharmaceuticals is up 1.3% at 3,142p after it was has been upgraded to Outperform from Neutral by BNP Paribas Exane this morning. The price target of 4,070p implies there is around 31% potential upside from current levels.

Financially-embattled cinema operator Cineworld said it expects to emerge from Chapter 11 bankruptcy protection in July after its restructuring plan secured the backing of 99% of its lenders. It filed for bankruptcy protection last September and has been trying to restructure its massive debt pile ever since. It plans to ask for final court approval for its restructuring on June 12.


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