Market report

Nationwide | L&G | Bodycote | retail sales


5pm: London higher

The FTSE 100 closed 38.98 points higher at 7,385.52, helped by a rebound in retail sales figures in October which followed a fall in September, which was distorted by the state funeral (see below).

North Sea explorer Ithaca Energy which has just floated on the main market said it remains committed to its dividend policy despite revisions to the energy profits levy announced by Chancellor Jeremy Hunt on Thursday.

The company said it will work with government and industry partners to evaluate its development opportunities under the revised levy.

Mr Hunt announced that the rate of the energy profits levy, also known as the windfall tax, will be increased to 35% from January, up from 25% to ensure oil and gas companies benefitting from extraordinary prices “pay their fair share”.

Ithaca said the levy favours companies that are reinvesting their profit in the UK North Sea, such as Ithaca itself.

Baillie Gifford suffered its highest net outflows in over a decade in October after investors pulled £1.95bn from its funds, with Schroders losing £734m, according to Morningstar’s October fund flow commentary.

In terms of individual strategies, Baillie Gifford’s Diversified Growth Fund saw the highest net outflows of £452m, while investors took £371m out of BG’s Multi Asset Growth Fund.

A brighter note was Abrdn recording its highest net inflows in over a year, pulling in £734m during the month, followed by Legal & General enjoying a £526m input.

Shares in troubled AIM stock Parsley Box closed 1.15p (69.70%) higher at 2.8p, valuing the company at £2.03m after it announced it was proposing cancelling its shares.

7am: Nationwide

Nationwide Building Society said pretax profit for the first half rose 13%, as income benefited from rising interest rates.

Britain’s second biggest provider of home loans said profit for the six months rose to £969m from the same time a year ago.

The lender said credit impairment charges rose to £108m, from a net release of £34m set aside for potential loan losses in the first half of last year.

7am: Legal & General

Investment Group Legal & General said it expected resilient full year 2022 operating profit growth in line with the 8% delivered in the first half despite taking the £10m hit from the chaos caused by Kwasi Kwarteng’s mini-budget.

It said it expected resilient full year 2022 operating profit growth in line with the 8% delivered in the first half (£1.16bn vs £1.08bn) and full year 2022 capital generation of £1.8bn in line with the guidance given at the half-year stage.

But it said the turmoil in liability-driven investment (LDI) strategies after the infamous mini-budget led to clients selling higher fee products to meet collateral requests.

As a result it expected annual revenue and profits in its direct benefit pension scheme business to reduce by about £10m in 2022.

L&G welcomed the Chancellor’s references to solvency II reform which it believes represent a positive step forward.

The proposals “will allow us greater flexibility to make appropriate investments and estimated the reform to the risk margin would increase the group’s solvency ratio by 3-4 percentage points” it said.

7am: Bodycote 

Bodycote held full-year guidance after posting revenues up by 29% in the four months to 30 October due to price increases and energy cost surcharges.

The company introduced energy surcharges at the end of last year with the intention of covering the highly volatile costs of electricity and gas.

7am: Parsley Box

Meals delivery firm Parsley Box , chaired by Scottish entrepreneur Chris van der Kuyl, is bringing an end to its disastrous run on the stock market by cancelling its shares.

Full story here

Global markets

Figures released earlier by the Office for National Statistics showed that retail sales bounced back in October, up 0.6% following a 1.5% decline in September. Analysts had been expecting a 0.3% rise.

Darren Morgan, ONS director of economic statistics, said: “Retail sales increased in October, although this is likely a rebound effect after weak sales last month as many retailers closed or operated differently on the extra bank holiday for the Queen’s funeral.

“Looking at the broader picture, retail sales continue their downward trend seen since summer 2021 and are below where they were pre-pandemic.”

In the US the Dow, S&P and Nasdaq all ended slightly lower in a subdued session as hawkish comments from a US Federal Reserve official and conflicting data as to the strength of the US economy saw investors pause for breath.

At the close the DJIA was down 6 points, the S&P 500 fell 0.3%, to 3,947 and the Nasdaq Composite dipped 0.35%.

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