Market report

Stocks fall on rates | Jobless rises | FirstGroup | Bellway

5pm: Investors nervous ahead of rate announcements

Stocks in London ended lower ahead of crucial meetings at the Federal Reserve and Bank of England which are both expected to result in interest rate rises.

There is particular concern that rates in the US will be raised aggressively this year in a bid to rein in inflation with a 75 bps rise this week.

The FTSE 100 index closed down 18.35 points, or 0.3%, at 7,187.46.

Go-Ahead closed up 17% after agreeing a deal with Kinetic  and Globalvia Inversiones, though rival bidder Kelsian Group urged the shareholders of the transport operator to take no action, saying it is in talks with Go-Ahead for a cash bid of its own.

9.30am: Housebuilders rise

Housebuilders are higher after a positive trading update from Bellway.

It said demand was strong and completions for the year were expected to grow by around 10% to around 11,100 – in line with guidance – though the average price was expected to dip marginally to £305,000. Its shares are up 2.31%.

The news lifted Persimmon by 2.13%, Barratt Developments  by 2.1% and Taylor Wimpey by 1.27%.

Following yesterday’s rout the FTSE 100 edged higher, trading at 7,224.13, up 18.32 points (0.25%).

7am: Unemployment rises

Britain’s unemployment rate rose slightly to 3.8% in the three months to April, despite a new record high for job vacancies, official figures showed.

Economists polled by Reuters had expected the jobless rate to fall to 3.6% from 3.7% in the previous reading.

The number of job vacancies in the UK rose to a new record of 1.3 million, over half a million more than before the onset of the pandemic..

7am: FirstGroup buoyant

Transport company FirstGroup posted a surge in pre-tax profits from £115.8m to £654.1m for the year to 26 March. It has restored its dividend and is proposing a final payout of 1.1p per share.

It has signed a three-year extension to its Great Western Railway contract.

Executive Chairman David Martin said: “We have delivered on our commitments this year to refocus the business, de-risk the balance sheet and unlock value for shareholders.”

7am: Calnex chair steps down

Calnex Solutions, the Linlithgow-based telecoms testing company, said George Elliott will retire as chairman at the AGM on 17 August after nine years in the post.

Non-executive director, Stephen Davidson, has been appointed as chair designate and will succeed Mr Elliott at the conclusion of the AGM.

Full story here

7am: Bellway sales strong

Housebuilder Bellway said it has seen strong sales demand in the period 1 February to 5 June, with an average of 253 reservations per week (2021 – 239 per week, 2020 – 158 per week), an increase of 5.9% compared to the equivalent period in the prior year.

It said positive price momentum continues to offset build cost inflation.

7am: Iomart targets acquisitions

Cloud computing firm Iomart said it had made “positive progress in evaluating targeted opportunities to further extend the Group’s technology, product capabilities and routes to market, while enhancing revenue, profitability and EPS”.

Pre-tax profit for the year to the end of March was 2% lower and an 8% fall in group revenue reflects lower non-recurring equipment and consultancy sales, along with lower customer renewal levels at the start of the year, which have since returned to normal levels.

The Glasgow-based company said the first two months of the new financial year has seen performance in line with the board’s expectations, consistent with its high recurring revenue business model.

The proposed final dividend is trimmed from 4.5p to 3.6p.

Full story, including media call, here

Global markets – S&P 500 in bear market

Wall Street closed sharply lower as traders fretted over higher than forecast inflation figures reading and expectations of a potentially bigger hike in rates by the Federal Reserve on Wednesday.

At the close, the S&P 500 was 3.88% weaker, while the Dow Jones Industrial Average was down 2.79%, and the Nasdaq Composite took the worst hit, down 4.68%.

The S&P 500 fell to a new intraday low for the year and its lowest level since March 2021, as investors digested last Friday’s news that inflation had not peaked as hoped and the consumer price index had risen 8.6% year-on-year in May, its fastest increase since December 1981.

The FANG+ index of mega-cap growth stocks – Facebook (Meta), Apple, Amazon, Netflix and Google (Alphabet) etc – is down 37.5% since the start of the year.

The money markets are now pricing in US rates of between 3.75% and 4% in a year’s time.

US West Texas Intermediate (WTI) crude eased 4 cents to $120.89 a barrel at 0156 GMT, while Brent crude futures dipped 6 cents to $122.21 a barrel.

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