Market report

Banks fall after rule breaking | No BT-Warner inquiry


5pm: Banks take a hit

HSBCNatWest GroupBarclays and Lloyds Banking Group were 1.57%, 0.88%, 0.7% and 0.23% weaker, respectively, after the Competition and Markets Authority named them among six high street banks found to have broken rules under the Retail Banking Market Investigation Order 2017.

Metro Bank bucked the trend, however, jumping 5.13% even after being named in the CMA’s announcement, which said the bank had already refunded a handful of customers that were overcharged.

Online grocer Ocado jumped a further 5.1% despite yesterday posting an interim EBITDA loss of £14m.

JD Sports Fashion was down 0.46%, despite saying like-for-like sales were up 5% year-to-date, and reiterated guidance for full-year headline pre-tax profits in line with its record performance in the year ended 29 January.

The FTSE 100 closed 5.86 points higher at 7,276.37, despite a further erosion in retail sales and business confidence.

Sterling was also in positive territory, last rising to $1.2037, and strengthening 0.42% against the euro to €1.1769.

However, next week sees some earnings figures from the banks a key Fed decision as well as the first reading on US second quarter GDP that might easily provide fresh recession worries.

7am: No referral for TV deal

The Competition and Markets Authority has decided “on the information currently available to it”, not to investigate the merger between BT and Warner Brothers Discovery.

The companies announced in May that they would be forming a premium sports joint venture, bringing together BT Sport and Eurosport UK.

BT will receive an initial £93m from Warner Bros Discovery and up to £540m in an earn-out from the joint venture.

Marc Allera, future chairman of the JV and CEO BT’s Consumer division, said “It’s great news that the CMA has approved the new JV that we are forming with Warner Bros. Discovery, combining the very best of BT Sport and Eurosport UK, to create an exciting new offer for live sport programming in the UK.

“Today is a huge milestone, as we now look toward day one of the new business, which we hope to be in the coming weeks.”  

7am: Retail sales fall

A 0.1% month-on-month fall in retail sales volumes in June was the second successive monthly decline. Alongside May’s fall being revised to -0.8% from -0.5%, it meant retail sales fell 1.2% in Q2, compounding a 1.4% fall in the previous quarter and keeping the sector in recession.

Martin Beck, chief economic adviser to the EY ITEM Club, says: “Anecdotal evidence cited by the ONS suggested the extra bank holidays for the Queen’s Jubilee celebrations spurred spending on food, with sales in this area having risen 3.1%.

“But the other major retail sub-sectors all saw sales decline, with a 4.3% month-on-month contraction in fuel sales also likely to reflect Jubilee-related distortions.”

7am: JD Sports Fashion

In a pre-AGM statement, leisure and outdoor wear group JD Sports Fashion reaffirmed that sales in like-for-like businesses in the first four months of the year were 5% ahead of the prior year.

The group said this “positive performance” has continued through June and that, after five months, the total sales in the group’s like-for-like businesses remain 5% ahead of the prior year.

Headline profit before tax and exceptional items for the year end 28 January 2023 will be in line with the record performance for the year ended 29 January 2022, said the board.

It also expects that the phasing of the profit in the current year will reflect a more normalised trading pattern with approximately 35% to 40% of profits generated in the first half.

7am: AssetCo share split

Asset manager AssetCo, chaired by Martin Gilbert, is planning to split each share into 10 new shares in order to improve liquidity and marketability of the stock. The closing middle market price on 21 July was 770p. 

The sub-division is a response to shareholder feedback and aims to make the shares more appealing to retail investors after the board noted a recent increase in the number of retail shareholders on the company register.

Global markets

The European Central Bank yesterday lifted interest rates by 50 basis points, despite previously guiding for a quarter percentage point hike. It was the first increase for 11 years and ended an era of zero and negative rates.

The US Federal Reserve will announce its next move at its meeting next Wednesday.

In New York overnight, traders felt more confident that any rises will be moderated. The Dow Jones Industrial Average closed up 0.5%, the S&P 500 added 1.0%, and the Nasdaq Composite surged 1.4%.

In Tokyo, the Nikkei 225 was 0.5% higher and the Hang Seng in Hong Kong 0.1% up, while the Shanghai Composite was down 0.3%.

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