Market report

Wetherspoon optimistic | Aviva | EasyJet | Microsoft


4.30pm: London closes lower

The FTSE 100 was spent most of the session under water and closed 12.49 points lower at 7,744.87.

7am: Wetherspoon ‘optimistic’

JD Wetherspoon

JD Wetherspoon chairman Tim Martin said he is cautiously optimistic about prospects for the pubs chain despite high costs.

In the 25 weeks to 22 January 2023, like-for-like sales were 13.1% higher than the same period a year ago and 0.7% lower than the same period immediately before the pandemic.

Like-for-like sales in the last 12 weeks were 17.8% higher than the same period a year ago and were 2.0% lower than the pre-pandemic period.

Since January 2020, the company has invested £80.4 million in the freehold reversions of 31 properties, of which Wetherspoon was previously the tenant.

In the period under review, the company has repaid government “CLBILS” loans of £100 million, which had been due to mature in August 2023.

Mr Martin repeated his assertion that the biggest threat to the hospitality industry is the disparity in tax treatment between pubs and restaurants and supermarkets.

“We estimate that supermarkets have taken about half of the pub industry’s beer volumes since Wetherspoon started trading in 1979, a process that has likely accelerated following the pandemic,” he said.

“Pub industry directors have, in general, failed to campaign for tax equality, which is an important principle of taxation.

“Unless the industry campaigns strongly for equality, it will inevitably shrink relative to supermarkets, which will not help high streets, tourism, the economy overall, or the ancient institution of the pub.”

7am: Aviva’s positive year end


Insurance group Aviva has maintained its dividend guidance and capital returns outlook after reporting a positive end to trading for the year in its general insurance unit.

“We continue to price appropriately for the high inflation environment, in particular in UK Personal Lines, responding at pace to emerging data and trends,” the insurer said in a statement.

It estimated December’s adverse weather conditions in the UK to cost around £50 million and said it continues to support customers following the cold snap.

7am: Easyjet cuts losses

EasyJet holidaymakers

EasyJet expects to beat current market expectations for 2023 based on the strength of bookings into summer that will help it achieve a full-year profit.

The airline reported a headline loss before tax of £133m for the quarter to the end of December against a loss of £213m when Covid travel restrictions were in force. It is forecasting its loss for the first half to be significantly better than in the first half of 2022.

EasyJet Holidays upgraded expectations customer growth from 30% to about 50% year-on-year.

“Whilst we remain mindful of the uncertain macroeconomic outlook across the globe, based on current high levels of demand and strong bookings, easyJet anticipates beating the current market profit expectations for 2023,” the company said in a trading statement.

John Moore, senior investment manager at RBC Brewin Dolphin, said: “EasyJet’s results are a classic recovery story, with the airline on track to beat profit expectations in the second half of this year.

“More people are beginning to travel again, while the airline has reshaped its routes and proposition.

“Fuel costs continue to be a drag on easyJet and consumer confidence is a potential headwind, but the company is relatively well hedged and bookings are strong for the year ahead.

“At a £3.4 billion market cap, EasyJet is not far away from a return to the FTSE 100 and, if the airline can deliver on expectations, it should get there later this year.”

7am: Producer prices

Producer input prices rose by 16.5% in the year to December 2022, down from 18.0% in the year to November, and down from 20.2% in the year to October, according to the Office for National Statistics (ONS).

Producer output (factory gate) prices rose by 14.7% in the year to December 2022, down from 16.2% in the year to November and down from 17.5% in the year to October, the ONS said.

Microsoft defies expectations


Microsoft defied analysts’ expectations by reporting higher-than-expected earnings in its fiscal second quarter driven by strong growth from its cloud unit.

Revenue from its Intelligent Cloud segment came to $21.5 billion, up 18% and just ahead of the $21.4 billion consensus.

That led to overall revenue growing by 2% year-over-year at $52.8 billion, but below Street expectations of $52.9 billion.

Investors and traders alike had anticipated seeing the technology giant lose traction on both earnings and profit.

However, Joshua Mahony, senior market analyst at online trading platform IG, said Microsoft’s fiscal 2Q earnings highlight the need to bring costs under control, as rising interest rates and recession fears bring concerns that demand will collapse over the course of 2023.

Global markets

On Wall Street, the Dow Jones Industrial Average led the way at the close with a gain of 0.3% , but the S&P 500 finished flat and the Nasdaq had dropped 0.3%.

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