Market report

ITV confident in ITVX | Compass | Brewin Dolphin | Tui


10pm: US stocks fall

The Dow Jones Industrial Average gave up a small gain earlier in the day to finish down 1%, over 300 points, while the S&P 500 fell 1.6% and the tech-heavy Nasdaq Composite 3.2%.

Stocks fell after inflation came in higher than expected.

5pm: London stocks surge

The FTSE 100 index closed 104.44 points higher at 7,347.66 following a rally on Wall Street after US inflation data for April showed the first sign of slowing since last August.

Around London’s close, the Dow Jones Industrial Average was 1% higher, while the broader S&P 500 index added 0.8%. But the Nasdaq Composite shed 0.1% as tech stocks stayed under pressure.

In London, Compass Group ended the best performer, adding 7.6%, after the contract caterer announced a £500 million share buyback alongside strong results (see below).

ITV was 2.3% ahead after the broadcaster reported a first-quarter revenue rise, as it looks towards to the launch of its video streaming service ITVX later this year (see below).

7am: ITV confident in ITVX

Vera on ITV

ITV said it is well positioned to deliver ITVX, as a free, ad-funded streaming service, despite market negativity based on the costs involved and which caused its shares to plunge.

The broadcaster said it remains confident that it can deliver “at least £750 million of digital revenues by 2026”.

It said advertising comparatives get much tougher in Q2 and Q3 against the Euro Football championships in 2021 and is “mindful of the macroeconomic and geopolitical uncertainty”. However, it is on track to deliver its previously announced £17 million cost saving target for 2022.

Carolyn McCall, ITV chief executive, said its focus on three core areas “provides a solid foundation for ITVX – our free, ad-funded streaming service – which is on track for launch in Q4 and we remain confident that we will deliver at least £750 million of digital revenue by 2026.”

7am: Compass raises guidance

Catering business Compass announced a £500m buyback and posted a 279.8% rise in operating profit to £638m for the half year to 31 March on a 36.3% rise in statutory revenue to £11.5 billion.

Client retention is at highest ever level of 95.8%. The company declared a 9.4p per share dividend.

Dominic Blakemore, group chief executive, said: “Given our strong first half performance and positive outlook, we are increasing our full year organic revenue growth guidance from 20 – 25% to around 30%.

“Whilst we are cautious about the inflationary environment, our margin guidance remains unchanged, with full year underlying operating margin expected to be over 6%, exiting the year at around 7%.

7am: Tui retuning to profit

Holiday group TUI said it expects to return to profit in 2022 as summer bookings are likely to be close to 2019 pre-Covid pandemic levels and first-half losses were more than halved.

The company posted an operating loss of €603m, down 54%, and added that the Ukraine war had not impacted its key markets of the UK, Germany and Benelux, with only Poland and the Nordic countries “subdued”.

In the second quarter, TUI’s underlying EBIT narrowed to €330m, almost halving the €633m loss from a year ago.

7am: Marshalls

Building products company Marshalls said group revenue for the four months ended 30 April was up 7% at £201 million against the same period last year, on an equivalent days’ basis.

The group continues to operate in an inflationary environment and it remains confident that input cost increases can be passed on through the supply chain.

The board said it remains focused on developing future growth opportunities, delivering the strategic objectives set out in the five-year strategy and realising the opportunities that the acquisition of Marley will bring to the group.

The board is confident of achieving its 2022 expectations, which have been increased to include a material contribution from the acquisition of Marley.

7am: Brewin Dolphin

Wealth manager Brewin Dolphin posted gross discretionary inflows of £1.9bn for the half year to the end of March (H1 2021: £1.6bn). Total discretionary net flows came in at £1bn (annualised growth rate of 4.0%).

Total funds for the first half were broadly flat at £56.3bn (FY 2021: £56.9bn) due to volatile market performance driven by the conflict in Ukraine and the macroeconomic environment. Total discretionary funds were broadly flat in the first half and up 8.1% year-on-year at £49.4bn (FY 2021: £49.8bn; H1 2021: £45.7bn).

Total income increased by 4.8% year-on-year to £209.5m (H1 2021: £199.9m), driven by higher fund levels year-on-year partly offset by normalised levels of commission, as expected.

Adjusted profit before tax increased 2.3% to £48.1m (H1 2021: £47.0m)

The 515p per share acquisition by RBC Wealth Management, announced on 31 March, is conditional on shareholder and regulatory approvals and is expected to complete by the end of calendar Q3 2022.

Following the announcement of the recommended offer, the board is not recommending an interim dividend.

Global markets

London edged higher but Wall Street lost steam after some early gains to end the session in the red ahead of some key inflation data scheduled for release today.

“The ebb and flow of US markets continues to be the main driver, with the S&P500 making a new one year low at 3,958, before recovering back above 4,000, to eke out a modest gain, while the Nasdaq 100 closed higher, and the Dow closed lower,” said Michael Hewson, analyst at CMC Markets.

At the close, the Dow Jones Industrial Average was down 0.26%, while the S&P 500 was 0.25% firmer at and the Nasdaq Composite saw out the session 0.98% stronger.

The FTSE 100 added 26.64 points to close at 7,243.22. European bourses followed suit with Germany’s Dax rising 1.15% and France’s CAC 40 index adding 0.5%.

In Asia, Japan’s Nikkei was trading up 0.3% and Hong Kong’s Hang Seng strengthened more than 2% while the Shanghai Composite gained 1.9%.

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