Market report

BrewDog narrows loss | B&M sales slip | GSK’s $3.3bn deal


10pm: Inflation reignites bearish activity

Further turbulence on Wall Street saw the Dow Jones Industrial Average fall 0.7%, the S&P 500 dip 0.6% and the Nasdaq Composite ease 0.4%.

The Dow and the S&P 500 finished the month little changed, supported by a major rally the week prior. The Nasdaq lost about 2.1% on the month.

Tuesday’s market action underscored fears that high inflation is weighing on economic growth.

5pm: Footsie hangs on

The FTSE 100 closed 7.6 points higher at 7,607.66, well below the session peak of 7,648.26 – its highest level since July 2019.

However, investors remain nervous and Wall Street returned from its Memorial Day off to indulge in a bout of selling. Around London’s close, the Dow Jones Industrial Average was 194 points, or 0.6% lower, while the broader S&P 500 index was down 0.6%, and the Nasdaq Composite lost 0.4%.

3pm: BrewDog invests in people, narrows loss

Under fire brewing and bars company BrewDog responded to criticism of its staff culture by saying it increased investment in staff by £9m for training, rewards and culture, and made 839 hires in 2021, bringing its workforce to 2,346.

Its annual results show that the Ellon-based company’s operating loss fell from £6.8m to £5.5m while revenues jumped 21% from 2020 to £286 million, as its UK sales and market share grew.

Its adjusted ebitda grew by 79% to £14m, and it said improving margins and market-leadership positions were offset by continued investment in people and Covid-related losses in its retail arm.

9.30am: London edges higher

With US markets closed overnight for Memorial Day, European markets in general were lacking a bit of direction on Tuesday.

Stocks in London moved higher in early trade, with BP and Shell racking up solid gains as oil prices rose after EU leaders agreed to ban 90% of Russian oil by the end of the year. Brent Crude has soared to $123.5 a barrel.

The FTSE 100 was trading at 7,644.39, up 44.33 points.

7am: B&M sales fall, hires CEO

Discount retailer B&M European Value Retail said UK like-for-like sales over the first eight weeks of the current financial year were down 13.2% and 11.5% against 2022 and 2021, respectively.

It said profits were flat for the year to 26 March and announced that CFO Alex Russo will replace departing Simon Arora as CEO. Mr Russo has held senior leadership positions at retailers such as Asda, Tesco and Kingfisher.

Ross Hindle, analyst at Third Bridge, said: “Despite a tough trading landscape, discounter B&M is likely to benefit from the cost of living squeeze as shoppers trade down.

“Our experts believe B&M has the ability to pass on inflation costs to its customers without compromising on its price gaps with key competitors. It will also consider other creative alternatives such as re-engineering certain products and shrinkflation.

“Compared with category specialists, B&M is nimble enough to change product offerings where it can’t make an item work at a particular price point.

“Our experts expect a mix shift towards grocery and away from general merchandise, which will ultimately hurt margins, a trend which goes against what we have seen in current earnings.”

7am: GSK acquisition

Pharmaceuticals giant GlaxoSmithKline is acquiring Boston-based clinical-stage biopharma company Affinivax as part of a deal valued at up to $3.3bn.

GSK will make an upfront payment of $2.1bn for Affinivax, with another $1.2bn in potential development milestones to follow upon the achievement of certain paediatric clinical development milestones. Under the terms of the agreement, GSK will acquire 100% of the outstanding shares of Affinivax.

Russian oil ban only partial

European Union leaders have agreed to ban more than two-thirds of oil imports from Russia in an effort to deny funding for its war against Ukraine, though oil will continue to fly via a key pipeline.

The EU had planned to ban all oil imports by the end of this year but the talks have stalled over the impact of shutting off pipeline oil to landlocked countries.

Opposition to a total ban has been led by Hungary, which is dependent on the pipeline for 65% of the oil used for its petroleum production, but wider divisions over the impact of energy sanctions have also come into play.

The compromise agreement, reached last night, also includes plans for the EU to send €9 billion (£7.6 billion) in “immediate liquidity” to Kyiv.

12.01am: Confidence – mixed readings

Business confidence in Scotland rose 14 points during May to 42%, the highest reading since June 2021, according to the latest Business Barometer from Bank of Scotland Commercial Banking.  

The latest ICAEW’s Business Confidence Monitor for Scotland, published last week, found businesses were the least confident in the UK and the measure considerably down from its peak at the end of 2021. 

Global markets

Asia-Pacific rose sharply as sentiment was boosted by a relaxation of Covid controls over the weekend Beijing and Shanghai.

Signs that China was becoming a little more tolerant to Covid infection rates helped lift the share prices of luxury goods companies. Burberry rose 2.1%, LVMH rose 2.6% and Hermes International jumped more than 4%.

“The Covid case load in China has been a source of weakness for companies selling high end products given that the market is still considered to be the growth engine of the sector, but now there are high hopes big spenders will be flocking back to boutiques to get their hands on coveted brands,” said Hargreaves Lansdown analyst Susannah Streeter.

Shares in Countryside soared 19% to 283p after San Francisco-based Inclusive Capital on Monday said it was looking to make a £1.47bn bid.

In-Cap, which holds a 9.2% stake in Countryside, said the possible offer was to buy the remaining shares in the house builder it does not already own for 295p each.

US markets were closed yesterday for the Memorial Day holiday.

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