Market report

Market unruffled by Sunak package | Man Utd losses rise


5pm: Investors unruffled by Sunak’s statement

Markets have been left largely unruffled by Rishi Sunak’s windfall tax, says Danni Hewson, AJ Bell financial analyst. “Shares in those big oil businesses slipped a touch in anticipation of the Chancellor’s non-budget but dusted themselves off pretty quickly as it became apparent that the stick came along with a pretty big carrot.

“BP in particular has promised big investment in the UK’s energy infrastructure, investment that will now deliver a rather impressive tax break. And even though these energy giants will have to cough up a bit of the extra cash they’ve been coining in because of elevated prices, they’re still sitting pretty.”

Beleaguered retailers were also lifted as investors expect them to benefit from the easing of pressure on bills. B&M Bargains, Next, M&S and Primark owner Associated British Foods all enjoyed decent gains in their share price.

“If people are a little less worried about those autumn energy bills, they might not cut back in quite the same way,” said Hewson. “And those middle-income shoppers might not trade down in search of value particularly when it comes to special occasions like next weekend’s Jubilee.

Travel stocks were also broadly in favour, no doubt for similar reasons. Even EasyJet shares stayed in positive territory despite an IT issue which led to it cancelling around 200 flights today. Cruise operator Carnival, IAG, Jet2 and On the Beach were all up, only TUI seemed to be stuck battling headwinds.

“Today’s intervention won’t be a panacea,” said Hewson,”people will still find the next months painfully difficult to navigate, but they will have just a little bit more fuel in the tank than they’d been expecting. The only question is how will this bit of extra cash in our pockets affect prices, will that fuel just stoke the flames higher for longer?”

The FTSE 100 closed just off its day high, up 42.17 points at 7,564.92.

2.30pm: Manchester United losses increase

Manchester United made a loss of £27.7m for the three months to the end of March, a 53% increase on the same period last year, due to rising wages and unfavourable exchange rates.

Revenue rose 29% to £152.8m, largely due to the return of supporters to Old Trafford following the Covid-19 pandemic.

But costs rocketed to £175.4m, as the wage bill grew by a fifth to £101.8m.

Commercial revenue grew 13% to £65.6m, helped by fans being able to shop in the Old Trafford megastore once again.

This was largely offset by a fall in broadcast income as the club’s early exits from knockout competitions reduced their number of matches.

Matchday revenue bounced back to £35.7m, up more than 2,000 per cent as fans were allowed to return to fixtures.

Net debt increased more than 11% to £495.7m.

9.30am: FTSE 100 shrugs off Sunak’s package

The FTSE 100 reacted with a shrug to a £10 billion package from the UK Government to support households struggling with the cost of living, says AJ Bell investment director Russ Mould.

“A windfall tax is widely expected to fund the package and energy firms were weak again this morning.”

Perth-based SSE, which recovered some of Tuesday’s losses yesterday, went into reverse this morning, down 3%.

The FTSE 100 rose in early exchanges, but was last trading 6 points lower at 7,516.41.

Investors had their first chance to react to the departure of JD Sports chair Peter Cowgill, news which was sneaked out just before last night’s market close.

Mould said: “Despite the shares not extending yesterday’s fall too much it’s clear the announcement has created significant concern.

“Cowgill’s immediate departure brings to an end an extremely successful tenure at the top of the sports apparel seller, where he helped the company to be among the best performing names on the stock market before this year’s big sell-off.

“Coming just five months after a £5 million fine was issued by the regulator it appears JD is keen to get its ducks in a row and finally address corporate governance concerns by splitting the role of CEO and chair.

“There are reports Cowgill opposed some of these changes and investors must decide whether the apparent governance improvements were worth losing such a successful leader of the business.”

9am: FirstGroup confirms approach

Transport company FirstGroup said it has received a series of unsolicited, conditional proposals from I Squared Capital Advisors in relation to a possible offer for the company.

Full story here

7am: Henry Boot buoyant

Construction group Henry Boot said its three key markets are seeing buoyant demand. The group continues to manage build cost inflation and supply constraints, achieving sale prices that are offsetting those pressures and allowing good margin levels to be maintained.

Due to a number of significant transactions, 2022 performance is expected to be weighted to the first half of the year and it is anticipated that whilst levels of activity will be high in the second half, this will primarily be contributing to the Group’s performance for 2023 and beyond.

7am: Wickes ahead of pre-Covid sales


Home improvement group Wickes said like-for-like sales for the first 20 weeks are down 0.6% against the prior year. On a three-year basis, which compares with the pre-Covid period, total group sales are 22.4% ahead.

CEO David Wood said: “I am delighted to report continued momentum, and a promising start to the year where we continue to take market share.

“This performance is testament to the strength of our uniquely balanced business – across Trade, DIY and DIFM – and it has been achieved against strong prior year comparatives. I am particularly proud of our long-term performance, with sales remaining significantly ahead of pre-lockdown levels.

“Our growth levers are delivering strong returns and we are excited about our plans to optimise our store estate with refits and new stores. Looking ahead, while we remain mindful of the uncertain macroeconomic environment, we continue to be confident of the opportunities available to Wickes within the large and growing home improvement market.”

Core sales reflect continued buoyant demand in Local Trade with trade customer order books remaining at record levels.

“Like many businesses, we have seen inflation continue during the period, and we are managing this responsibly while maintaining our leading price position.”

7am: National World pursues acquisitions

Newspaper publisher National World, owner of The Scotsman, Falkirk Herald and Yorkshire Post, said it had made a “robust” start to the year and is pursuing acquisition opportunities.

Ahead of today’s AGM, chairman David Montgomery said: “Despite a more uncertain trading environment, we are accelerating our transformation into a premium content and sales business across all platforms.

“We continue to launch new products, invest in organic growth, enhance heritage assets and streamline our infrastructure to create further efficiencies.’

Full story here

7am: AJ Bell reduces charges

AJ Bell chief executive Andy Bell said the investment platform was responding to rising cost of living costs by reducing charges across the advised and direct-to-consumer propositions which will deliver total annualised savings to customers of about £5 million.

“This follows consistent reductions to the charges on our AJ Bell funds as assets under management have grown,” he said in a statement with half-year figures. “The annual charges on the first five multi-asset funds we launched five years ago have nearly halved from 0.50% to 0.31% during that time, again delivering significant savings to customers.”

The company said the customer retention rate was 95.4% (FY21: 95.0%).

Revenue rose to £75.5 million in the six months to the end of March (HY21: £73.9m), producing profit before tax of £26.1m (HY21: £31.6m) and a PBT margin of 34.6% (HY21: 42.8%).

The company has declared an interim dividend of 2.78p per share.

12.05am: Car production falls

Britain’s car production fell 11% in April as a result of continuing chip shortages and supply chain issues, made worse by the Ukraine crisis.

The Society of Motor Manufacturers and Traders (SMMT) said 60,554 vehicles left factory gates last month, compared with 68,306 units in the same month last year. Electric cars made up more than a quarter of those vehicles, up about 2% year-over-year.

Six in 10 cars exported in April were headed to the European Union, a 5% rise year-over-year.

Global markets

Wall Street closed in positive territory as minutes from the Federal Reserve’s most recent policy meeting suggested the central bank was prepared to be flexible with interest rate hikes.

Naeem Aslam, chief market analyst at AvaTrade, said it was “clear” that the Fed was going to be running “on autopilot”, and would be paying close attention to economic data.

“The fact that the Fed will only increase the rates by 50-basis points has pushed the dollar index further lower and as a result we have seen the gold price moving higher.

“For the equity traders, the FOMC minutes were music to their ears as this is exactly what they wanted to hear,” Aslam said.

“No one wants to see the Fed being overly hawkish when there is potential fear of a recession taking place.”

At the close, the Dow Jones Industrial Average was up 0.6%, the S&P 500 added 0.95% and the Nasdaq Composite advanced 1.51%.

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