Markets report

Budget timing questioned | Deliveroo | Wickes | Rightmove


5pm: Markets calm

UK markets were calm as the nation sat tight, in anticipation of the third Prime Minister of the year being appointed at some point over the next week.

The FTSE 100 closed 25.99 points higher at 6,969.90.

7am: Borrowing and budget timing

Carl Emmerson, deputy director of the Institute for Fiscal Studies, has questioned the timing of the 31 October fiscal plan just three days after the election of the new PM.

Public sector borrowing in the first half of this year was £72 billion, almost the same as the Office for Budget Responsibility’s forecast for this period in March.

But Mr Emmerson says this is little guide to how much borrowing will be over the whole of this financial year, as the huge cost of Government support for household and business energy use only began in earnest this month.

“We forecast that borrowing this year could reach almost £200 billion, which would be nearly £100 billion more than the OBR forecast. 

“A key focus for the next Prime Minister and their chosen Chancellor needs to be fiscal responsibility. We need a credible plan to ensure that government debt can be expected to fall over the medium-term.

“Given the timeline for determining the next Prime Minister, the degree of economic uncertainty, and the importance of getting this right, there is a strong case for taking a bit longer to make good decisions which have more chance of standing the test of time, rather than going ahead with a major fiscal event only a few days into the new PM’s tenure.”

7am: Deliveroo

The meals delivery service Deliveroo has guided to full-year revenue at the lower end of its range due to the squeeze on consumer budgets.

Full-year gross transaction value (GTV) growth was now expected to be in the range of 4-8% in constant currency, the lower part of the previously announced 4-12% range, which it had downgraded in July. 

Will Shu, founder and CEO of Deliveroo, said: “Throughout 2022 we have been adapting financially to the operating environment and driving forward on our path to profitability.

“We now expect the H2 2022 adjusted EBITDA margin to be better than our previous guidance. We continue to be excited about the opportunity ahead and our ability to capitalise on it.”

7am: Wickes

Home improvement retailer Wickes has announced third quarter like-for-like sales growth of 2.6%, compared with the 0.8% reported for the first half.

Following the sable third quarter performance it continues to expect full year adjusted pre-tax profit to be in the range of £72-82m.

Looking further ahead, uncertainties remain regarding consumer confidence and operating cost inflation, said the board.

“In particular, our costs will be impacted by rising energy prices once our energy contract ends in March 2023. If energy costs were to remain at the current price cap for businesses, then our FY2023 energy costs would be c£7.5m higher than FY2022.”

David Wood, CEO, said the firm’s “balanced business model leaves us well placed to continue to outperform the market.”

7am: Rightmove hires CEO

Property agent Rightmove has appointed Johan Svanström as chief executive to succeed Peter Brooks-Johnson who will retire after the full year results.

Mr Svanstrom has worked in the business to consumer online marketplace. Following his appointment as global president of and Expedia affiliate network brands in 2013, he served on the Expedia group global leadership team and over five years grew revenues to over $3 billion and led direct teams of 1,500 people across four continents.

He joined Expedia from McDonald’s. A Swedish national based in the UK, he currently serves as a partner at EQT growth advisory team, which is part of EQT, the global investment organisation.

Social media slump

Shares of Meta Platforms, Google-owner Alphabet and other companies that sell digital ads dropped on Thursday after Snapchat owner Snap Inc blamed inflation for its slowest revenue growth since going public five years ago, reports Reuters.

Snap was the first major social media company to release its September-quarter earnings, and its stock tumbled 25% following the disappointing results after the bell. Snap warned that it would see no revenue growth in the normally busy holiday quarter.

Shares of other companies that sell internet advertising also fell, with Facebook-owner Meta down about 4%, Alphabet down 2% and Pinterest losing nearly 8%. All together the sell-off in late trading erased over $40 billion in stock market value from those and other internet ad companies, including Spotify and Roku.

Snap’s warning comes after already steep losses in shares of social media companies, with Meta down about 60% year to date, and Pinterest down almost 40%.

Alphabet reports its quarterly results on Tuesday, followed by Meta on Wednesday.

Global markets

Sterling was quoted at $1.1196 early Friday, lower than $1.1294 at the London equities close on Thursday.

Wall Street ended lower, with the Dow Jones Industrial Average down 0.3%, the S&P 500 down 0.8% and the Nasdaq Composite down 0.6%.

In Asia, Japan’s Nikkei 225 index was down 0.4%, the Shanghai Composite was up 0.4%, while the Hang Seng index in Hong Kong was down 0.8%. 

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