A softer US inflation figure has boosted investor confidence after Asian markets built on last night’s strong performance on Wall Street.
The tech-focused Nasdaq jumped almost 3% after the annual inflation rate dipped by more than expected to 8.5%, lifting hopes that the Federal Reserve may be able to slow the pace of interest rate rises.
In London’s session, half-year results from Entain showed the Ladbrokes, Gala Bingo and BetMGM business continued to trade in line with expectations after underlying earnings rose 17% to £471 million.
Stocks make gains as inflation fears subside: US markets open
Thursday 11 August 2022 14:52 , Simon Hunt
Stocks made gains in the opening minutes of trading on Wall Street today after the release of a report showed pressure was easing on US producer prices. The news was partially offset by news that weekly claims for unemployment benefit had rose by a second straight week.
Disney was among the biggest winners today, as its stock rose 8.2% on the news that it had overtaken Netflix on subscription numbers for the first time.
Steve Clayton, fund manager at Hargreaves Lansdown, said: “New inflation data showed a slower than expected pace of price increases. Investors took this as a sign that the scale of US interest rate rises could be less than first feared and bid stocks higher.
“Investors might have been cheered, but the Federal Reserve was keen to pour cold water over the markets’ ardour, with officials stressing that rates were going to keep on rising until the Fed was confident that inflation was heading back to its 2% target.”
Rich buyers will sustain London’s prime housing market, says Savills
Thursday 11 August 2022 12:52 , Simon Hunt
Central London’s prime property markets will ride out of the cost of living storm with wealthy buyers who do not need mortgages still snapping up high- end apartments and houses, agent Savills said today.
The firm said it continued to expect luxury London homes to go up in value next year despite expectations of a UK recession. The average price of a property sold by the group in the past six months grew by 16% to hit £2.2 million.
Savills group chief executive Mark Ridley told the Standard: “We’re still positive about the premium market in the year to come and beyond.
“We’re still predicting house price growth at the upper end.”
Cash-rich buyers at the top end of the market were less exposed to rising interest rates as they tend to borrow less when investing in a new home, Ridley said, adding a shortage of housing stock was also slowing down transaction rates and pushing up prices.
It comes as Savills reported a bumper six months of growth, with revenues in the first half of 2022 topping £1 billion, up 11% on 2021, led by a 26% jump in commercial property transaction revenue as employers searched for new space amid a post-Covid return to the office.
Savills shares slid 10% in early trading.
Derwent cheers West End office space revival
Thursday 11 August 2022 12:11 , Simon Hunt
A surge in demand for high-quality West End office space has pushed vacancy rates down to pre-Covid levels as the district bounces back from the pandemic, developer Derwent London said today.
The company, which announced a 13.2% rise in pre-tax profits to £137.1 million for the first half of the year, said data showed vacancies of 4.3%, back in line with the long-term average.
Chief executive Paul Williams said: “The buzz is back, if you go to the West End it is rammed. There has been a huge flight to quality, people are looking for better buildings to attract and retain talent and they are happy to pay a premium to do that.”
However, the City’s recovery has been slower with the vacancy rate still at 12.3% against a long term average of 6.6%.
The company said take-up of space across central London in the first half was 16% above the 10-year average with letting activity of 6.4m sq ft.
Finance has been the most active sector at 24% followed by professional services and creative industries, both 19%.
Derwent added: “Despite some of the large tech companies pulling back on their space expansion plans, there remains a broad range of businesses with active requirements. A variety of international companies continue to choose London for their UK or European HQ.”
Greener mining lifts Ethereum
Thursday 11 August 2022 11:35 , Simon Hunt
The price of Ethereum has jumped 10% to recover to its highest level in two months after the cryptocurrency announced testing work was under way to make using the coin more efficient.
The move, scheduled for September, will see the digital asset transfer from what’s known as a proof-of-work to a proof-of-stake mechanism, which consumes less energy and is set to make using the coin much cheaper.
The announcement has enthused environmentally conscious investors as pressure grows on the crypto world to bolster its ESG credentials, amid a jump in energy prices that has sent crypto mining costs soaring.
Despite the gains, the Ethereum price remains 45% down on the start of the year. It has a total market cap of £187 billion.
Coral owner bets on expansion despite caution on squeeze
Thursday 11 August 2022 11:19 , Simon Hunt
Coral and Ladbrokes bookies giant Entain has warned that it is “not immune” to the squeeze on consumer spending as it reported a 17% increase in half-year group earnings to £471 million.
It also unveiled plans to expand in central and eastern Europe starting with the €600 million (£506 million) acquisition of Croatia’s largest sports betting company SuperSport.
Chief financial officer Rob Wood told the Standard more could follow. “We’ve also formed a partnership with a local private equity firm to do further acquisitions. We view SuperSport as a platform acquisition — it’s the starting point and then we build through the region.”
Entain also resurrected its dividend payouts for the first time since Covid, with £100 million on the way to investors this year.
Haleon shares continue decline, OSB up 3%
Thursday 11 August 2022 10:26 , Graeme Evans
More heavy selling today worsened the hangover being felt by GSK shareholders since the drugs giant’s consumer healthcare demerger.
The spin-off Haleon business, which was targeted by Unilever in a £50 billion takeover approach last year, replicated yesterday’s 8% slide by losing another 21.8p to 257p.
Haleon, whose other brands include Aquafresh and Advil, opened at 330p in mid-July after GSK split off the unit in its biggest corporate restructuring move in two decades.
The City’s caution reflects concerns over Haleon’s starting debt position and worries that cash-strapped consumers will shun big brands in favour of supermarket own-label products.
As well as a sharp fall in their new Haleon holdings, GSK shareholders have also seen a decline in the value of the stand-alone pharmaceuticals business. GSK weakened another 2% or 20.6p to 1536p, which compares with more than 1700p at the end of July.
Haleon was the biggest faller in a session when the FTSE 100 index failed to keep pace with the bounce seen for European and Asian markets after yesterday’s softer-than-expected US inflation figure.
The top flight weakened 7.55 points to 7499.56, although some of this weakness was due to trading in heavyweight stocks such as Barclays and Rio Tinto being without the right to their latest dividend awards.
One of the best performances in the top flight came from bottling business Coca-Cola HBC, which jumped 2% or 37p to 2018p after its half-year results showed a 23% rise in underlying earnings. Full year guidance was also reinstated, having been withdrawn in the wake of disruption to its operations in Russia and Ukraine.
There was also encouragement for M&G shareholders after the investment manager reported improved client flows in half-year results, sending shares 4.5p higher to 222p.
Blue-chip fallers included specialist engineering group Spirax-Sarco, which dipped 175p to 11,825p despite growing adjusted half-year profits by 10% to £175.2 million and reporting record order books across its three divisions.
The FTSE 250 index was 51.01 points lower at 20,246.99, although the recent improvement for specialist lender and savings business OSB continued after its underlying profits rose 16% to a record £294.1 million. The shares added 3% or 15.5p to 563p.
Coca-Cola HBC jumps 6%, FTSE 100 flat
Thursday 11 August 2022 08:35 , Graeme Evans
A strong start for European markets has excluded the FTSE 100 index after London’s top flight remained close to its opening mark at just above 7,500.
One factor in the underperformance is the larger number of blue-chip stocks now trading without the right to their latest dividend award, including Barclays, Rio Tinto and Shell.
The biggest improvement in the FTSE 100 index came from bottling business Coca-Cola HBC, which jumped 6% or 115p to 2096p after it reinstated full-year guidance in the wake of a 23% rise in underlying earnings.
Other big risers came from the technology sector after yesterday’s improved inflation figure reduced US rate rise expectations. Scottish Mortgage Investment Trust, whose portfolio includes stakes in Tesla and Amazon, rose 8p to 917.2p.
Specialist engineering group Spirax-Sarco was one of the blue-chip fallers, losing 175p to 11,825p after interim results.
The FTSE 250 index climbed 71.68 points to 20.369.68, with Network International and specialist lender and savings business OSB among those higher after results. Their shares lifted 8% and 2% respectively.
US markets rally on softer inflation figure
Thursday 11 August 2022 07:56 , Graeme Evans
Stock market buying in the wake of a bigger-than-expected fall in the US inflation rate to 8.5% left the S&P 500 more than 2% higher and tech-focused Nasdaq up 2.9%. The Hang Seng and Shanghai Composite were also up by more than 1% this morning.
Investors hope inflation’s softening in July will give the US Federal Reserve room to ease the pace of interest rate rises, with Wall Street now looking for an increase of 0.5% in September rather than the 0.75% forecast earlier this week.
There’s another inflation figure due just before the next Fed meeting, while today’s producer price index (PPI) figure is likely to be just as important in determining the approach.
June’s PPI reading unexpectedly jumped back to 11.3%, raising concerns that further inflationary pressures were building up in US supply chains. It is expected to fall back to 10.9% in today’s July print.
In the meantime, Federal Reserve policymakers have stressed that it is too early to declare victory in the fight against inflation after yesterday’s decline from a 40-year high of 9.1%.
The year-on-year fall was mainly due to a slowdown in the surge in gasoline costs, with core inflation unchanged at 5.9% but lower than the 6.1% forecast.
The release helped the FTSE 100 index to finish 0.4% higher yesterday, while CMC Markets is not expecting any change from 7507 at the start of today’s session.