Market report
M&S sales rise | SSE plan | Lidl pay hike | Aviva
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5pm: Market plunges on inflation fears
The prospect of more interest rate rises on the back of higher than expected inflation sent markets across Europe into a tailspin.
Credit Suisse now expects that the Bank of England will raise rates to 5% in August, after April inflation data released earlier showed it coming in at 8.7%, above predictions of 8.4%. Japanese bank Nomura said it expected the Bank to raise its main interest rate three more times to 5.25% by September.
There were heavy falls on European markets which suffered their biggest one-day loss since March, with the FTSE100 falling below its April low and to its lowest levels in six weeks. It closed 135.85 points down at 7,627.10.
7am: Marks & Spencer
High street retailer Marks & Spencer’s revamp of its clothing range appears to have paid off with sales up 11% over the year. Food sales were also higher, up by 9% in the year to 1 April.
Overall sales at Marks & Spencer rose by 9.9% but inflationary pressures and the absence of business rates relief saw lower margins and adjusted pre-tax profit fell 12% to £482m, though better the expected £431m. Revenue was 9.6% higher.
“M&S has had a good start to the new financial year, with both food and clothing & home growing sales,” said the company.
“The strategy is beginning to deliver improved performance and there remains much within the group’s control.”
It said it has made a ‘good start’ to the new financial year and plans to reinstate a modest dividend.
7am: SSE
Energy generator and network operator SSE has set out plans to invest up to £40 billion this decade on clean energy projects.
The company confirmed the plans as it posted adjusted pre-tax profit of £2.18 billion for the year ended 31 March, up from £1.16bn a year earlier.
Alistair Phillips Davies, chief executive, said: “The results that we have reported today represent profit with a purpose.
“They enable us to deliver record investment – far in excess of our earnings – in vital low-carbon energy infrastructure.”
7.30am: Lidl pay rise
Lidl GB has announced its third pay rate increase in 12 months which will impact all of its 24,500 hourly-paid employees. The latest raise will increase earnings by up to 16% more than their counterparts at other supermarkets.
Store and warehouse staff working outside the M25 will see hourly pay increase to £11.40 from £11.00, rising to £12.30 with length of service.
Pay for those inside the M25 will increase to £12.85 from £11.95, rising to £13.15.
The move represents an overall investment of £8 million and equates to a combined investment of over £60 million into pay in the past year alone.
7am: Aviva Q1
Insurer Aviva reported continued growth across the group in the first quarter although net flows to its wealth business fell after a volatile period for markets.
Amanda Blanc, group chief executive, said: “We have delivered an encouraging start to 2023 and continue to build clear trading momentum.
“New business volumes are good, despite persistent economic uncertainty, and we delivered another quarter of strong growth across our diversified business.”
7am: Artisanal Spirits Company
In a pre-AGM statement, chairman Mark Hunter said the company had made a positive start to the year.
“We see another period of revenue and membership growth, with global membership now over 38,000.
“Revenue performance has returned to growth in Q2, following a broadly flat start to the year, with the trajectory expected to continue for the remainder of the half year.
“Membership has increased 10% year on year as at the end of April 2023, benefitting in particular from a notably strong performance in Europe.”
7am: Inflation falls
Inflation dropped to 8.7% in the year to April from 10.1% in March, its lowest rate since last summer, according to the Office for National Statistics.
Global markets
Wall Street’s major indexes closed lower as investors fretted over the ongoing stalemate on the federal debt ceiling negotiations.
Despite encouraging reports from both the White House and Republican congressional representatives after Monday’s discussions, the lack of any substantial progress on Tuesday dampened market sentiments.
At the close, the Dow Jones Industrial Average slipped 0.69%, while the S&P 500 lost 1.12% and the tech-heavy Nasdaq Composite lost 1.26% of its value.
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