Market report

Barratt on track | THG puzzled by slump | GDP slows


5pm: FTSE back in green

The FTSE 100 recovered from a subdued start to close 11.59 points higher at 7,141.82 as traders digested the latest GDP figures showing the economy grew a touch less than expected in August despite the easing of Covid measures (see below).

British and Scottish Gas owner Centrica was 4.55% weaker after saying it was postponing its capital markets day due to an unprecedented crisis in the energy sector.

Just Eat Takeaway fell 1.67% even after it reported a 25% jump in third-quarter orders and reiterated its full-year guidance.

Among the risers were house builder Barratt Developments for a second successive day, jumping 6.29% after it said strong demand for its homes had continued into the current fiscal year.

It pulled Taylor Wimpey, Persimmon and Berkeley higher, by 3.95%, 3.59% and 1.71%, respectively.

THG, the former Hut Group, fell a further 2.95% or 8.4p to 276.6p despite issuing a statement saying there was no reason for its shares to collapse by 35% on Tuesday.

9.45am: Analyst says THG may have been overvalued

Reacting to yesterday’s plunge in THG stock, Russ Mould, investment director at AJ Bell, said: “Capital market days are meant to be informative events, helping analysts and investors better understand a business.

“In THG’s situation it was eye-opening for the wrong reasons. It seems that attendees didn’t get the level of information they wanted, and messages were quickly fed back to HQ to dump the stock.

“Having joined the stock market with a lot of fanfare, the market now seems to be taking the view that THG was grossly overvalued and that breaking the business up creates more questions than answers.”

Full reaction and latest here

9.30am: Barratt leads risers

The morning’s top riser was Barratt Developments, up 3.2% after a positive trading statement (see below) which pulled the sector up.

TH`G, formerly The Hut Group, saw a further 4% fall in early trade but was lately trading flat after issuing a statement saying it knew no reason for yesterday’s catastrophic fall (see below).

The FTSE 100 was trading 21.2 points lower at 7,109.03.

8am: Growth slows

Economic growth is showing signs of slowing. The latest figures from the Office for National Statistics show GDP grew by 0.4% in August compared to a forecast rise of 0.5%, meaning it is 0.8% below its pre-pandemic level.

The previous month has been revised downwards to show a 0.1% fall rather than a 0.1% increase, mainly due to falls in car manufacturing as the global semiconductor shortage hit the sector.

Services were the biggest contributor to the August rise, with output growing by 0.3%, helped by accommodation, food and entertainment in the first full month of lockdown restrictions being fully eased.

Construction contracted, with output down by 0.2% in August . The sector is now 1.5% below its pre-pandemic level.

7am: Barratt ‘on track’

Barratt Developments said it remains on track to deliver its FY22 and medium term targets set out in the FY21 results.

David Thomas, chief executive, commented: “The positive start to the new financial year has continued in recent weeks with private reservations remaining strong.

“This is particularly encouraging given the significant year on year reduction in Help to Buy reservations and the ending of the stamp duty holiday.

“We continue to work closely with our suppliers and sub-contractors and have not experienced any significant disruption to our build programme as a result of the challenging supply chain environment.”

7am: NatWest expands climate fund

NatWest (RBS) Group is setting a new target to provide £100 billion of Climate and Sustainable Funding and Financing (CSFF) by the end of 2025.

It will help support the support the bank’s customers, including SMEs on their transition to a net zero and a more sustainable economy.

Full story here

7am: THG knows of no reason for shares crash

Following a 35% fall in the shares of online retailer THG following its capital markets presentation it said it “knows of no notifiable reason for the material share price movement, and that no material new information was disclosed at the event.”

See: Hunter punt THG loses third of value as shares crash

7am: Marston’s ‘improving’

Pubs chain Marston’s said that since restrictions were lifted on 12 April, the Group has seen a continuous improvement in trading.

For the most recent quarter from 25 July to 2 October, it saw a return to growth over 2019, with sales 2% higher across its managed and franchised pubs.

Overall, trading since 12 April has been at 94% of 2019 levels which includes the benefit of the temporary VAT reduction on food and non-alcoholic drink sales.

Global markets

A subdued start was expected in London after modest falls in the US and Asia overnight as investors await key inflation data.

The Dow Jones Industrial Average closed 0.3% lower, the S&P 500 was down 0.2% and the Nasdaq Composite was off 0.1% after a Federal Reserve official said it is close to pulling back on its stimulus measures.

The muted sentiment spread to Asia where the Japanese Nikkei 225 index was down 0.1%. In China, the Shanghai Composite was up 0.1%, while trading in Hong Kong was suspended due to a typhoon. The S&P/ASX 200 in Sydney was down 0.1%.

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