Market report

Nationwide doubles profit | surprise retail uptick


10pm: US flirting with bear market

The Dow Jones Industrial Average was down around 500 points before paring back losses, while the S&P 500 was flat and the tech-heavy Nasdaq Composite lost 0.3%.

Amid one of its worst starts to a year on record, the S&P 500 briefly plunged into a bear market – at one point down over 20% from its intraday record high in January – and posted its seventh straight week of losses, its longest down streak since March 2001.

5.30pm: Ashley takes more space on Princes Street

Mike Ashley’s luxury fashion retailer Flannels is taking the former Bhs store in Edinburgh’s Princes Street in a huge boost for the city’s retail offering.

Full story here

5pm: London higher on China rate move

Sentiment was boosted by China cutting one of its key interest rates, as investors were also encouraged by better-than-expected retail sales data.

The FTSE 100 ended the session up 87.24 points (1.19%) at 7,389.98.

Online retailer THG rocketed 28.55p (24.52%) to close at 145p after it rejected a £2.1bn takeover approach from Belerion Capital Group and King Street Capital Management late on Thursday. But the price is still well short of its 170p offer.

Russ Mould, investment director at AJ Bell, said this would suggest the market has little faith in the deal in that price range going through as THG does not want to be bought. Full story here

8am: Retail surprise

Retail sales volumes increased by an unexpected 1.4% month-on-month, reversing March’s (downwardly revised) 1.2% decline. This left volumes 4.1% above their pre-Covid level in February 2020.

Martin Beck, chief economic adviser to the EY ITEM Club, says: “Given April saw the typical household energy bill rise 54%, petrol prices reach a record peak, and CPI inflation come in at 9% – the highest since 1982 – anything other than a poor retail performance would have been a surprise. But surprise there was.”

Danni Hewson, AJ Bell financial analyst, said: “The unexpected upturn in retail sales could be viewed as a positive sign that the consumer isn’t as bruised as other data suggests. 

“But digging into April’s figures the big uptick in food and drink spend in supermarkets might indicate that people are choosing their kitchen tables over pubs and restaurants as they look to save money.

“Whilst food spend has been largely unchanged, which suggests people are still being cautious, spend on alcohol and tobacco has soared.  Life’s little luxuries, the things that help us get by when times are tough, will have to come in under budget as those budgets are tested.”

7am: Nationwide better than expected

Debbie Crosbie TSB

Underlying profits at Nationwide Building Society doubled as it prepares to welcome new chief executive Debbie Crosbie, pictured.

Ms Crosbie, former Clydesdale Bank executive and TSB chief executive, will succeed Mr Garner on 2 June.

Outgoing CEO Joe Garner said the society’s financial performance for the year was better than anticipated, as market conditions recovered more strongly than expected over the course of the year, leading to significantly higher profits.

Underlying profit increased to £1.6 billion (2021: £790m) on higher net interest income of £3.6bn (2021: £3.2bn), as a result of stronger margins on mortgages taken out early in the pandemic, as well as growth in core products.

The net interest margin improved to 1.26% (2021: 1.21%) and gross mortgage lending increased to £36.5bn (2021: £29.6bn).

Kevin Parry, chairman, said: “Nationwide has emerged from two years of a pandemic with a thriving membership, strong profitability and enhanced financial strength.

“These strengths will stand the Society in good stead, as we transition to a new leadership team and respond to new geopolitical uncertainties.

“Given our financial strength, we are well-positioned to manage these impacts, as well as to evolve our services to meet our members’ changing needs.”

7am: DeepMatter extends deal

DeepMatter, the Glasgow-based digital chemistry data and software company, has renewed its long-term commercial relationship with Springer Nature, a global research publisher, for a further three years.

The Agreement is expected to generate revenues of at least €206,000 during the term.

DeepMatter licences proprietary algorithms and supports Springer Nature in handling proprietary data to accelerate and enhance discovery for its academic and industry customers. 

Mark Warne , CEO of DeepMatter, said: Springer Nature is committed to supporting researchers in sharing research data and we are delighted to be working with them to provide products and services making sharing research data faster, easier and more impactful.”

Global markets

Stocks in London are hoping for a a boost from an interest rate cut in China. The FTSE 100 is down 1.6% so far this week but Europe was looking to shake off losses in the US and follow Asian markets higher.

Asian stocks were boosted after China announced it will cut a key interest rate in a boost to home buyers and debt-mired developers, as the country’s economy is slowed by Covid-19 restrictions in major cities.

Tokyo’s Nikkei 225 index was up 1.3%. In China, the Shanghai Composite was up 1.4%, while the Hang Seng index in Hong Kong was up 2.3%.

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