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Economy to surge; Next lifts forecast; Reach revenue dips


5pm: Market higher on Bank forecast

Blue chips have spent all but a brief period this morning trading above 7,000 as investors responded to an upgrade on the economy from the Bank of England (see below). The FTSE 100 closed 36.87 points higher at 7,076.17, a 14-month high.

Shares in Superdry rose nearly 19% after the retailer revealed “light at the end of the tunnel” with a rise in revenue in recent months (see below).

Reach, the publisher of the Daily Record and other newspapers, said that it will likely do better than analysts expect (see below), sending shares up 6.6% by the end of the day.

Next also ended the day in healthy territory, up 1.7% after the board raised profit targets (see below).

Noon: Interest rate unchanged – faster expansion

The Bank of England has announced that the base rate of interest will remain at 0.1% and forecast that the economy is will expand by 7.25% in 2021, the fastest since 1949.

Laith Khalaf, financial analyst at AJ Bell, comments: “The Bank of England is expecting a consumer spending spree to fuel an explosive economic recovery this year, funded by the war chest savers have built up throughout the pandemic. In February, the Bank predicted 5% of these excess savings would be spent, but that’s now been upgraded to 10%.”

Andrew Megson, executive chairman of My Pension Expert, said: “It was wise to refrain from lowering base rates further. This will undoubtedly help to stabilise the economy. And as the market settles, so too will the value of pension investments – much to the relief of prospective retirees.”

11.30am: Services sector rebounds

The UK’s services sector rebounded in April with growth climbing to a seven-year high as lockdown restrictions were eased.

The sector, which accounts for 80% of the UK economy, had the fastest rise in output since October 2013.

The purchasing managers’ index from IHS Markit/CIPS climbed to 61 for April, up from 56.3 in March. Any figure above 50 shows growth in the sector.

9am: Whisky funding

The Artisanal Spirits Company (ASC), owner of The Scotch Malt Whisky Society, has raised £19.5 million in development funding ahead of a possible flotation of the business.

Full story here

8am: Stocks rise

The FTSE 100 pushed ahead, rising by 19 points to 7,058.46 in early trade ahead of today’s meeting of the Bank of England’s monetary policy committee which is expected to keep interest rates and bond issuing unchanged.

7am: Next homeware boosts figures

Next Straiton

Fashion and homeware chain Next has raised its profit guidance after online sales of home furnishings and children’s clothes helped it beat forecasts.

Full price sales in the 13 weeks to 1 May were down 1.5% on two years ago meaning the company has beaten its previous central guidance which assumed that Q1 would be down 10%.

It has increased its central guidance for full year profit before tax by £20m to £720m.

This profit upgrade accounts for the £75m sales over-achievement in Q1.  It has not raised the sales guidance for the rest of the year, which remains at 3% higher against two years ago.

The company said very few of the retail sales lost on adult clothing were recovered online.  

“In reality, it was the growth in online sales of Next Homeware, third-party brands (through LABEL) and Next childrenswear, along with increasing sales overseas that served to make up for the sales we lost in our stores,” it said in a trading update.

“In the last three weeks sales have been exceptionally strong and, versus two years ago, total full price sales were up +19%.  In that period, full price sales in like-for-like retail stores were up +2% and online sales were up +52%.”

However, the groups say evidence from last year suggests that this post lockdown surge will be short lived, and it expects sales to settle back down to guidance levels within the next few weeks. 

“We are therefore maintaining our sales guidance for full price sales for the rest of the year to be up +3% versus 2019.  Within this guidance, we have maintained the assumption that retail will be down -20% and Online will be up +24%.

7am: Reach revenue falls

Record and Express

Over the four months to 25 April the owner of the Daily Record, Daily Mirror and Daily Express said group revenue for the period was down 3.1%. Total print revenue fell 10.4% and circulation was down by 7.9%, while digital revenue grew by 35%.

Operating profit for the year is now expected to be slightly ahead of market expectations.

Jim Mullen, chief executive, said: “We have had a positive start to the year and are seeing the benefits of last year’s transformation programme.

“With digital now accounting for more of our advertising revenues than print and growing strongly, we are well placed to make further progress during 2021.

“We have a strong balance sheet and are now increasing investment to accelerate delivery of the Customer Value Strategy, focusing on the use of enhanced customer insight to drive engagement and support our medium-term objective of doubling digital revenues.”

7am: Aston Martin progressing

Aston Martin DB11

Revenue at the luxury car maker for the first quarter increased 153% to £224m principally due to wholesale growth and stronger pricing dynamics as dealer GT/Sport stock reduced as planned

Adjusted EBITDA came in at £21m with 9% margin reflecting improved trading and some initial cost efficiency benefits.

Lawrence Stroll, executive chairman, commented: “I am delighted with the great progress we are making as demonstrated by the results we are reporting today which mark the first steps towards achieving our medium-term targets.

“Our new team is assembled and focused on executing our exciting plans. My co-investors and I are very confident in the future success and potential for Aston Martin as we transform the company to be one of the greatest luxury car brands in the world.”

7am: Barratt Developments

Housebuilder Barratt said it is enjoying strong trading and now expects an outturn for the full year modestly above the board’s previous expectations.

It said forward sales for the January 1 – May 2 period were £37bn, compared with £2.8bn for the same period last year. It is refunding £3.5m in Covid business rate relief. It has already refunded £26m received from the Coronavirus Job Retention Scheme.

7am: Superdry encouraged

Superdry said quarterly revenue inched up 1% but full-year figures were still down 21% compared to last year.

The clothing retailer said the reopening of stores in the UK has been encouraging but EU trading remains suppressed due to continued restrictions.

In the year to 26 April, revenue shed 21% to £556mln, with stores down 51% as 39% of trading days were lost.

E-commerce was up 34% to £229m and wholesale tumbled by a fifth to £212m.

Overnight markets

The Dow Jones Industrial Average ended at a record high on Wednesday, while a tech sell-off left the Nasdaq lower.

The Dow Jones Industrial Average rose 96.99 points, or 0.28% and the S&P 500 gained 2.97 points, or 0.07%. The Nasdaq Composite dropped 51.08 points, or 0.37%.

In London, the FTSE 100 index closed at 7,039.3, a rise of 1.7% or 116 points, making it the best day of trading since the middle of February.

Stocks rallied after the head of the US Treasury said she had not meant to either predict or recommend interest rate hikes.

There was a commodity price boost for miners and positive Eurozone data providing impetus for investors.

The index’s top performing shares were dominated by Anglo American, BHP, Rio Tinto, Glencore and Evraz, as copper prices hit another 10-year high earlier in the day.

It saw the top companies in London rebound from an unusual midday crash on Tuesday that analysts said had no obvious cause.

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