FTSE 100 dips
The FTSE 100 is trading marginally lower at the start of the new week.
That follows on from a largely positive session in Asia, despite the latest data showing China’s service sector missed expectations in July and a deterioration in manufacturing as markets banked on it prompting the Chinese government to introduce fresh stimulus to get the economy going. The positive mood late last week in the US, driven by news that the Fed’s preferred measure of inflation hit its lowest level since the start of the pandemic, also carried over.
UK investors may be feeling cautious ahead of the Bank of England meeting this week, when markets expect interest rates to hit a 15-year high – with the big question whether we will see a 0.25 or 0.5 percentage point increase. There is also the RBA meeting, US non-farm payrolls and final PMIs to look out for. You can find out what to expect in the Week Ahead. Today, we have UK mortgage approval and lending data out this morning, alongside flash GDP and inflation rates out of the Euro Area. This afternoon in the US, we have the Chicago PMI and Dallas Fed manufacturing index.
It will also remain a busy week for earnings on both sides of the Atlantic. The UK calendar is headlined by oil giant BP, bank HSBC, baker Greggs, engine maker Rolls Royce and retailer Next, while in the US we have results due out from Apple, Amazon, AMD and others. Find out what to expect in Earnings for the Week Ahead.
FTSE 100 analysis: Where next for the UK 100?
The UK 100, which tracks the performance of the FTSE 100, has struggled to find higher ground over the past week, held back by the falling trendline that can be traced back to the 2023-highs hit in February. It is testing this trendline today.
However, we have seen it find reliable support at 7,650 after this provided a tough ceiling in June. The moving averages are there to provide a potential safety net should this fail but we could see it slip down to 7,450 if it comes under severe pressure.
A break above the falling trendline would put it on course to climb toward 7,780, marking the ceiling that dominated in May.
Top UK stock news
UK North Sea oil producers like Harbour Energy, Ithaca Energy, BP and Shell are up 0.4% to 1.7% in early trade after UK prime minister Rishi Sunak announced plans to unleash ‘hundreds’ of new oil and gas exploration licenses to kickstart new drilling in the region and make the country more energy independent, despite a pushback from climate activists.
BT Group is trading marginally lower in early trade after announcing Allison Kirkby will become chief executive ‘around the end of January 2024 at the latest’. Kirkby will be joining from Swedish firm Telia Co, where she has been president and CEO since early 2020, but she has been a non-executive director at BT since 2019. She will take over from Philip Jansen.
Pearson is up 3.8% after it delivered an improved performance in the first half as it reiterated its full year outlook. The education-focused firm said sales were up 5% at £1.88 billion thanks to increased demand for English language learning and assessment and qualifications, while adjusted operating profit grew 56% to £250 million as it reaped rewards from its cost efficiency programme. The dividend was raised to 7.0p from 6.6p the year before.
Spectris is up 2% after it upgraded its full year outlook as higher sales and better margins allowed it to deliver a record adjusted operating profit of £102.1 million – up 41% from the year before – in the first half of 2023. The precision measurement firm sales were up 23% in the period, with like-for-likes rising 19%, thanks to higher volumes and prices. It raised its interim dividend by 5% to 25.3p. Spectris said it now expects to grow organic sales in 2023 more than its 6% to 7% target range as it reiterated its hopes to grow adjusted operating profit by a double-digit percentage to a range of £250 million to £265 million.
Senior is up 0.2% after adjusted pretax profit doubled in the first half of 2023 to £17.6 million, driven higher by a 20% jump in revenue and an improvement in margins. That was ahead of the £15.8 million forecast by analysts. That performance gave it the confidence to also double its interim dividend to 0.6p. Senior said the rise in profits ‘reflected the strong momentum in our core markets and our positioning on key growth platforms across both Flexonics and Aerospace.’ The company reiterated its full year outlook.
Marshalls is up 0.4% after profits fell in the first six months of 2023 as the housing market remains challenging, with the firm warning that rising interest rates and persistent inflation will result in it underperforming in the second half. Revenue rose 2% in the first half to £354 million and pretax profit was down to £33 million from £45 million the year before. ‘Whilst previously anticipating a recovery in market conditions in the second half of the year, the board is now of the view that an improvement in the second half performance is unlikely given the macro-economic backdrop. In addition, the board has chosen to reduce production volumes with a negative impact on operational efficiency in order to manage working capital. Taking these factors together, and in the absence of a recovery in demand in the group's end markets, the board believes that the result in the second half will be markedly weaker than the first half, and consequently expects to deliver a result for the full year that is lower than its previous expectations,’ said the company in a statement.
Dr Martens is up 4.1% after Sky News reported over the weekend that activist investment firm Sparta Capital has acquired a stake worth tens of millions of pounds in the boot maker, making it among its top 10 shareholders.
NatWest Group is up 0.4% after launching the £500 million buyback programme that was announced last week when it posted results. This will end by March 2024.
Frasers Group is up 1.4% after it launched a new share buyback programme that could see it repurchase up to £80 million worth of stock between today and its next annual general meeting.
Capita is up 2.2% after it said it has issued unsecured senior loan notes of £50 million and $68 million, for a combined total of around £102 million, with three and five year maturities at an average annual coupon of 9.45%. Proceeds will be used to refinance existing debt and for general corporate purposes. ‘The issue of these notes will diversify the group's sources of funding by re-entering the US private placement market and extend the maturity profile of its debt,’ said Capita.
Sage has been downgraded to Hold by Cannacord Genuity, which has a price target of 970p on the company. The software firm is down 0.8% this morning at 932.8p.
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