Daily Business Live

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.

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