Market report

Royal Mail warning | Easyjet | SMS | IAG | Begbies Traynor


5pm: London falls again

London stocks were closed weaker following a selloff on Wall Street overnight amid growing concerns about global growth.

The FTSE 100 ended the session down 135.35 points (1.82%) at 7,302.74, and the FTSE 250 was off 1.31% at 19,689.02.

Technology-heavy Scottish Mortgage Investment Trust slid 18.40p (2.36%) to 759.5p after the release of its full-year results.

Royal Mail reported a rise in full-year profits but tumbled 12.38% after warning of price increases and £350m in cost cuts in a bid to combat soaring inflation.

7am: Scottish Mortgage Investment Trust sells down Amazon

Scottish Mortgage Investment Trust manager Tom Slater said it is reinvesting capital from Amazon, though it had “not made meaningful changes to the portfolio” despite market turmoil and still owns all the top 30 stocks it owned a year ago.

Full story here

7am: Royal Mail warning

Royal Mail letters post box

Royal Mail has warned of price increases and £350m in cost cuts to combat soaring inflation after reporting a rise in full-year profits.

Underlying operating profits rose 8% to £758m for the year to 31 March. On a reported basis, pre-tax profits fell 8.8% to £662m.

The company said consensus forecasts of a £303m adjusted operating profit could be hit “with downside risk”, assuming it could reach a deal with unions on pay staff pay rises “and without material industrial disruption”.

7am: EasyJet sees growth

EasyJet said it had reduced its loss for the half year to £545 million from £701m in 2021.

In the last 10 weeks, bookings have been 6% above the same period in 2019.

Johan Lundgren, easyJet chief executive said: “easyJet has reduced its losses year on year, at the better end of guidance. The pent-up demand and removal of travel restrictions provided for a strong and sustained recovery in trading which has been further boosted as result of our actions.

“In the second half leisure and domestic capacity will be above 2019 levels.

“We expect to operate 90% of FY19 capacity in Q3 and we have capacity on sale of around 97% of FY19 flying in Q4 with easyJet holidays now on track to carry over 1.1 million customers this financial year.”

7am: Begbies Traynor on track

Begbies Traynor, the business recovery, financial advisory and property services consultancy, said it expects to be comfortably ahead of market expectations and significantly ahead of the prior year.

In an update for the year to the end of April it said revenue is expected to increase by c.30% to c.£109.5m (2021: £83.8m). Adjusted PBT is expected to increase by c.55% to c.£17.8m (2021: £11.5m).

The group will report its final results for the year ended 30 April 2022 on Tuesday 19 July.

Ric Traynor, executive chairman, said: “We performed strongly in the financial year with results comfortably ahead of market expectations and significantly ahead of the prior year. This reflected the material increase in scale and scope of the group since 2021 following our acquisitions and investment in both divisions.

“Our strong financial position has further improved and we retain substantial resources to make further acquisitions to build our scale and range of complementary services. We have started the new financial year confident in our outlook and anticipating a year of further progress.”

7am: SMS revenues rising

In a pre-AGM statement, Glasgow-based metering installer and manager Smart Metering Systems said annualised recurring revenue grew to £91.4 million as at 30 April (31 Dec 2021: £85.9m).

The board said it expectations for FY 2022 underlying profitability remain unchanged.

7am: IAG orders 50 fuel efficient aircraft

British Airways owner International Airlines Group (IAG) has ordered 25 Boeing 737-8200 and 25 737-10 aircraft, with an option to extend..

The aircraft will be delivered between 2023 and 2027 and can be used by any airline in the group for fleet replacement.

Luis Gallego, IAGs chief executive, said: “The addition of new Boeing 737s is an important part of IAG´s short haul fleet renewal. These latest generation aircraft are more fuel efficient than those they will replace and in line with our commitment to achieving net zero carbon emissions by 2050.”

Global markets

Wall Street embarked on another sell-off as results from big-store retailer Target missed the mark, triggering a 25% collapse in its NYSE share price.

Walmart, Amazon, Apple and Starbucks were among the American consumer-facing stocks that saw big falls.

The Dow Jones Industrial Average slumped 3.5% and the S&P 500 was down 4% at 3,923. A resumption in selling of tech stocks saw the Nasdaq shed another 4.7%.

Asian markets followed suit. Japan’s Nikkei was 1.74% lower and Hong Kong’s Heng Seng lost 2.69%. The Shanghai Composite dipped 0.38%.

“This weakness in US and Asia markets is set to translate into a sharply lower open for European markets, as we look ahead to the latest US weekly jobless claims numbers which in recent weeks have started to edge higher again, above 200k,” said Michael Hewson, analyst at CMC Markets.

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